Maximizing Property Management Efficiency: The Importance of a Centralized Lease Data Repository

iLeasePro Central Repository Document Management

A centralized lease data repository is critical for a property manager for several reasons:

  1. Efficiency: A centralized system consolidates all lease information in one location, making it easier for property managers to access and manage data. This saves time and effort, as they no longer need to search through multiple sources or physical files.
  2. Accuracy: Centralizing lease data helps maintain accuracy and consistency by ensuring all information is up-to-date and free of discrepancies. It reduces the risk of errors, miscommunications, or outdated information, which can lead to legal or financial issues.
  3. Analysis and reporting: A centralized repository allows property managers to quickly and easily generate reports, analyze trends, and track key performance indicators. This can help them make informed decisions, identify areas for improvement, and optimize property performance.
  4. Collaboration: A centralized system enables better collaboration among property management teams, as well as with external stakeholders like property owners, tenants, and service providers. It allows for real-time sharing of information and streamlined communication, promoting a more cohesive work environment.
  5. Compliance and risk management: A centralized lease data repository makes it easier to track compliance with local, state, and federal regulations. It also helps property managers identify and address potential risks, ensuring they meet their legal and contractual obligations.
  6. Document management and storage: Centralizing lease data helps property managers manage and store lease documents, such as contracts, amendments, and addendums, more effectively. This can reduce the risk of losing or misplacing critical documents and ensure they are securely stored and backed up.
  7. Scalability: As a property management company grows and acquires more properties, a centralized lease data repository can easily accommodate this growth, providing a scalable solution that remains efficient and effective.
  8. Cost savings: Implementing a centralized lease data repository can lead to cost savings by reducing the need for manual data entry, duplication of efforts, and the use of multiple software systems. It can also reduce the risk of costly errors and legal disputes.

In summary, a centralized lease data repository is critical for a property manager as it promotes efficiency, accuracy, collaboration, and scalability while helping manage compliance, risk, and cost.

Try iLeasePro for free right now;

You can take a video tour of iLeasePro or schedule some time on our online demo calendar to see how iLeasePro can help you and your firm comply to the ASC 842 Standard.

ASC 842 Changes: Would a Specific Incremental Borrowing Rate Be Better?

image_pen The problem of determining the rate implicit in a lease also presented a concern that most preparers used the incremental borrowing rate (IBR) as the discount rate. However, that wasn’t the only concern that came to light during FASB’s roundtable in September 2020.   Apart from the rate implicit, members also discussed the IBR; i.e., how those that have adopted ASC 842 determine the IBR. It was recognized that a lot of time and effort goes into estimating the borrowing rate.  The Problem  For Non-Public Business Entity (Non-PBE) lessees, a risk-free rate is determined which uses a period set in the lease terms (paragraph 842-20-30-3). This risk-free rate was another cause for concern at the roundtable. The use of this risk-free rate under the current economic climate meant low rates and therefore high artificial lease liabilities, thus being potentially misleading for users.   When the costs incurred to determine the IBR, and the prospect of using a risk-free rate were combined, a question arose whether non-public business entities as well as public should be allowed to use some other rate or not.  Alternatives Proposed  Based on the argument, FASB proposed two alternatives to the members, preparers, and users in the roundtable handout. 
  1. No change. The rate and method used right now to determine and use IBR for PBE and non-PBEs should remain the same.  
  1. Both PBE and non-PBE lessees must use a market-specific rate instead of IBR.  
When the two alternatives were discussed, following were the respective arguments for and against the prospects.  
  1. Non-PBE would encounter issues when trying to determine IBR that falls on the definition presented in ASC 842 for IBR. The problem they would face would primarily be that they don’t have enough resources or departments that can determine a lease credit risk. However, if nothing is done, it is important to remember that the cost of determining IBR will only go down on a go-forward basis.  
  1. The second alternative suggested that a rate be recommended like in ASC 944 (Insurance) and ASC 715 (Compensation). The use of this rate would significantly simplify the whole process, not to mention result in more uniform and comparable books. The problem here is that the rate may be very different from risk-free rates that non-PBEs use. 
The Decision  Most participants agreed that the first alternative is much better, i.e., current requirements for IBR should remain the same for public companies. Preparers agreed that creating a new process for IBR would cost even more, though they agreed that postimplementation costs would be lesser.   Since users mostly use Disclosureto compare and evaluate companies, IBR didn’t really make much of a difference there.  However, this was all limited to PBEs. When it came to non-PBEs, most members were in favor of making adjustments to the standard. The change in ASC 842, if any, would be targeted toward allowing non-PBEs to choose whether they use the risk-free rate on: 
  • An asset-class basis  
  • Or for the whole entity. 
It was acknowledged there was a certain arbitration involved by allowing non-PBEs to use risk-free rates. To that end, members mostly were in favor of letting the FASB determine a specific rate for non-PBEs and implementing it via ASC 842.   Try iLeasePro for free right now; You can take a video tour of iLeasePro or schedule some time on our online demo calendar to see how iLeasePro can help you and your firm comply to the ASC 842 Standard.

Aligning the numbers when comparing multiple leases during Lease Negotiation

In a previous Blog posting, we introduced our readers to the Lease Analysis component of iLeasePro, our comprehensive lease management technology solution specifically designed for lessees. We indicated that Lease Analysis is an invaluable tool that supports lease negotiations and lease reassessment by providing the user with the technology for evaluating all the financial terms and conditions associated with alternative leasing opportunities and facilitating an “apples to apples” comparison of those alternatives.

A narrative description can only do so much to explain the capabilities of Lease Analysis, therefore, in this whitepaper, we present an example of a proposed transaction and how Lease Analysis can be utilized in the decision making process.

Our example company, Acme Holdings (”Acme” or “the Lessee”) must expand its operations and is evaluating three office locations with 10,000 square feet of available space. Acme has decided on a seven year lease term with no options periods and has determined that it will require tenant improvements (“TIs”) of $30 per square (total of $300,000) to outfit the space to its needs.

Lease 1 rent payment is for $25 per square foot in the first year increasing $1 per square foot each year to $31 in the final year of the lease. The landlord will not provide any TI allowance and there are $50,000 of other lease costs that must be paid by the Lessee. Additionally, for Lease 1, the landlord is proposing a lease with expense-stops and Acme is estimating that it will incur expense chargebacks of $82,813 over the seven year term of the lease based upon the base year costs and its 15% pro rata share of the property.

Lease 2 has twelve months of free rent in the first year of the lease with rent of $35 per square foot beginning in the second year and increasing $1 per square foot each year to $40 in the final year of the lease. The landlord for Lease 2 will provide a TI allowance of $150,000 with $10,000 in other lease costs that must be paid by the Lessee. For Lease 2, the landlord is proposing a lease with expense-stops and Acme is estimating that it will incur expense chargebacks of $51,529 over the seven year term of the lease based upon the base year costs and its 10% pro rata share of the property.

Lease 3 has rent beginning at $30 per square foot in the first year and increasing $1 each year to $36 in the final year of the lease. The landlord here will fund a TI allowance of $300,000 and there are other lease costs of $20,000 to be borne by the Lessee. For Lease 3, the landlord is proposing a lease with expense-stops and Acme is estimating that it will incur expense chargebacks of $99,376 over the seven year term of the lease based upon the base year costs and its 15% pro rata share of the property. Acme is using Lease Analysis to evaluate these alternatives and, in order to produce a comprehensive due diligence analysis, only certain basic information is required to be entered into iLeasePro, namely, property/unit description, square footage, lease term, rent payments, expense chargeback estimates, TI requirements, TI allowances, other lease costs, amortization period for TIs and other lease costs and a discount rate for present value calculations. Here Acme is using 6% as the discount since this is its cost of borrowing.

Lease Analysis produces the following report for the evaluation of the three alternatives.

Commencement Date


Expiration Date


Lease Term (Months)


Lease Term (Years)


Rentable Square Feet


Discount Rate





Lease 1

Lease 2

Lease 3

Property Sq Ft




Lessee ProRata for CAM




Base Rent PSF




Base Rent Annual Amount




Free Rent Months




Free Rent Amortization




Tenant Improvement Allowance PSF




Tenant Improvement Allowance




Tenant Improvement Total Cost




Tenant Improvement Cost Amortization




Other Lease Total Cost




Other Lease Total Cost Amortization




Rent Payments (PSF)




























Base Rent








Free Rent




Annual Rent Payment




Present Value of Annual Rent Payment




Average Annual Rent Payment




Net Effective Annual Rent Payment




Expense Chargebacks




Tenant Improvements




Other Lease Costs




Total Costs




Total Annual Rent Cost




Present Value of Total Annual Rent Cost




Average Total Annual Rent Cost




Net Effective Total Annual Rent Cost





Notice that the report displays all the critical information necessary to evaluate the lease alternatives.  The calculations of annual rent payments and annual rent costs include amortization of rental concessions, TIs and other lease costs over the term of the lease. Especially helpful are the present value and the net effective rent calculations to determine the true cost of the alternatives.  In evaluating the three alternatives, Acme has a number of variables to consider.

Lease 1 presents the lowest rent payments and notice that when other costs, such as outlays for TIs, other lease costs and expense chargebacks are considered, the total cost, average rent cost and net effective rent for this alternative are also the lowest on both an absolute and present value basis. However, with this option, Acme must make upfront cash payments of $350,000 for TI and other lease costs .  In Lease 2, Acme gets the benefit of free rent for the first year of the lease and a $150,000 TI allowance so the cash requirements in the first year are the lowest among the three alternatives. However, rent payments increase substantially over the term of the lease and total cost, average rent and net effective rent, on both an absolute and present value basis, are higher than Lease 1. Lease 3 presents the highest rent payments but also has the highest TI allowance and a rather modest amount for other leased costs. The resulting total cost, average cost and net effective rent are also higher than Lease 1.

Which lease options should Acme choose?  The answer may not be as obvious as it seems.  The initial choice might be Lease 1 because of the lowest cost results for most of the metrics. But cash payments early in the term of the lease may be a critical factor to an organization that has cash flow concerns. That might make Lease 2 or Lease 3 a more attractive alternative. Maybe Lease 2 is in a more prestigious location than Lease 1 and justifies the extra $1,198 per year effective rent.  Conversely, perhaps Acme has substantial cash at the beginning of the lease term and wants to have as low cash payments as possible over the term of the lease.  In addition, Acme may know that it will be likely to renew the lease after the seven year term and may want to enter into those negotiations with the lowest rent payments in the seventh year of the lease term. Once again, that might make Lease 1 a likely choice.

We are not here to draw a conclusion in this example. We cannot possibly know all of the considerations that would enter into a final conclusion. However, we have demonstrated that Lease Analysis can provide the user with an easy to evaluate, side by side comparison of all the relevant information necessary to draw a conclusion based on its business needs and situation. Too many times, lessees focus on only one aspect of a potential transaction when making a decision – the annual rent payments. But the other costs associated with the transaction should not be overlooked. For example, the negotiations involving the TI allowance or free rent are often critical issues for most office leases. A healthy TI allowance can mitigate much of the cost associated with setting up or moving an office. Free rent can be a critical factor for a start up entity.   Lease Analysis can be instrumental in helping the user determine how these aspects of the lease fit into the overall negotiations.

Too often lease management systems do not consider the need for a technology solution to assist in sorting out all the critical issues associated with evaluating lease alternatives and providing the user with the statistical tools for an effective negotiation. In fact, this is the most important part of the process – understanding all the aspects of the alternatives and getting the best deal. In planning iLeasePro, we were determined to develop an end to end technology solution that provided critical assistance to the user during the full life cycle of the lease. Our Lease Analysis component provides that type of critical assistance.

Lease Management and Accounting Tool

We have some exciting news to share with all of our readers.  iLease Management LLC will soon launch a lease management and accounting tool that will meet the critical needs of lessees as they react to the new lease accounting standards and continuously try and gain efficiency in their day to day operations.  As we have emphasized a number of times in the past few months, an accounting change of the nature being proposed provides a perfect opportunity to review and improve operating procedures.  We are confident that we are developing a technology solution that will accomplish that objective.  Some of the features and capabilities of this tool are as follows:

  • Dashboard – provides the user with the capabilities to see a high level view of all lease portfolios and critical dates.
  • Property – provides key property metrics and details.
  • Unit – drills down another level to provide critical unit level details.
  • Lease– captures important lease information that will facilitate effective lease management.
  • Rent– provides all critical rent information including base rent, free rent and rent steps.
  • Insurance – captures key insurance information.
  • Lease options – allows the user to effectively monitor option terms and conditions.
  • Accounting – using the information that has been previously input, the accounting feature automatically generates the accounting entries that will be required under the new accounting standard, both by individual lease and in the aggregate.  The user can export these transactions and is then ready to post these entries to the general ledger.
  • Reporting – a full suite of Lease Management and accounting reports

Additionally, the user will have the capabilities to capture key information on retail leases, maintain critical contact information, define critical dates, add specific and customized information on unique lease options and clauses and attach images and key documents.

As you are aware, we are monitoring the FASB/IASB activities and developing the accounting solution to be consistent with the new standard. We expect the tool to be available as soon as possible after the new standard is released.  We have been working on this project for a number of months and will keep you updated on our progress.  Our product will make a significant improvement in your operations.

In the meantime, we are interested in your comments and feedback.  Please update the Blog with your questions, comments and needs for additional information. Additional information can be found on the iLeasePro homepage.



iLease Management LLC monitors and reports on the progress of the proposed changes to lease accounting.  The FASB and the IASB issued an Exposure Draft in 2010 which generated a significant amount of controversy among preparers and users of financial statements. The Boards continue to meet to evaluate the more contentious issues and are considering changes to the Boards’ original proposal, particularly in such areas as lease renewal options and contingent rents.  Included is a simplified example of how we expect the current changes to impact the accounting process and reporting for a basic real estate lease.  This example does not take into account many of the more complex and subjective areas of the original Exposure Draft dealing with subjects such as lease renewal options, contingent rents, residual value guarantees and term option penalties.    

To illustrate the impact of the proposed new lease accounting model for lessees, consider the following example:


  1. A four-year non-cancelable lease term:  48 months
  2. Minimum monthly lease payment:  $1,000
    1. Assuming there are no defined lease options, contingent rental payments or residual value guarantee
    2. Incremental borrowing rate:  7%

Calculated Amounts

Present Value (PV) of lease payments = $42,000

Total lease payments over the 48 month term = $48,000

Balance sheet analysis

Under current GAAP Accounting for an operating lease where rent is accounted for in the current period

Existing US GAAP
  At inception End of Yr 1 End of Yr 2 End of Yr 3 End of Lease Term
No asset $0 0 0 0 0
No liability $0 0 0 0 0


Under the proposed guidelines, there is an increase in assets and liabilities.

Proposed Model
  At inception End of Yr 1 End of Yr 2 End of Yr 3 End of Lease Term
Right To Use Asset $42,000 31,500 21,000 10,500 0
Rent Payable $42,000 32,600 22,450 11,600 0


Profit and loss statement expense analysis

Under the proposed model, the right to use asset is amortized to expense over the term of the lease and the rent payable liability decreases as rental payments are made. 

  Year 1 Year 2 Year 3 Year 4
Existing US GAAP        
Rental Expense                                       $12,000 12,000 12,000 12,000
Proposed model        
Amortization of Right To Use Asset $10,500 10,500 10,500 10,500
Interest Expense $2,600 1,850 1,150 400
Proposed Expense $13,100 12,350 11,650 10,900


Accounting entries under the proposed model would be as follows:

  Debit Credit
Accounting by lessee – at inception    
Right To Use Asset $42,000  
Rent Payable                                           $42,000
Accounting by lessee – year 1    
Amortization Expense $10,500  
Right To Use Asset   $10,500
Interest Expense $2,600  
Rent Payable   $2,600
Rent Payable $12,000  
Cash   $12,000


In the profit and loss statement, rental expense under existing US GAAP becomes a combination of amortization and interest expense under the proposed model. Expense under the proposed model is higher in the earlier years of the term of the lease due to interest expense calculated using the effective interest method applied to a declining outstanding balance of rent payable.

In addition to the reporting changes to the balance sheet and P&L report identified above, firms should evaluate the impact to;

  • Current accounting processes
    • Lease Accounting system/software
    • Income tax impact
    • Financial Ratios
      • Increase in EBITDA
      • Return on Assets
      • Debt-to-Equity
      • Interest Coverage
      • Operating Margins
      • Debt covenant compliance
      • Ability to secure financing
      • Integrity of lease information
      • Resources required  

iLease Management LLC will continue to closely monitor and report on the decisions of the FASB/IASB Board meetings on the lease accounting changes.

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