Lease Renewal: Owner's Debt is a Key Factor

It’s vital that tenants understand their landlord’s motivators, and one of the most important motivators goes far deeper than simply maximizing profit. Understanding and leveraging an owner’s debt timing can lead to significant cost reductions for tenants.

Building owners, particularly those who own large buildings, leverage debt. In the vast majority of cases, that debt’s interest rate is the single-most important determinant of profitability. If the rate goes up at loan renewal, costs increase and margins across all tenants are reduced. Conversely, a building filled with reliable tenants under long-term commitments can look forward to favorable rates at loan renewal and, thus, better profit margins. The reason for the rate differences is obvious – a building’s risk to the lender is reduced, leading to better credit terms.

So how can a tenant take advantage of this timing? A total paradigm shift is required. Tenants tend to look at their own expirations as the driving force behind a renewal… start 1-2 years ahead of expiration (to allow adequate time to pursue ALL options) and negotiate under the threat of a relocation if you don’t get what you want. But what if a tenant’s lease expires in 3 years, the building loan comes up for renewal in 1 year, and the tenant is OK with a 10-year term? If the tenant begins renewal negotiations now and renews just before the loan renewal date, the building loan will be renewed based upon 10 years of revenue rather than the 2 years previously in play. Any deeper concessions given to the tenant NOW will be more than paid for by the landlord’s improved renewal terms.

The key is being able to access this debt information and leverage it properly. And there are a few factors that must be true for the tenant, so it’s not a one-size-fits-all scenario.

Click here for a great CoStar article reinforcing this point.

We welcome the opportunity to help you assess your situation.

Can EHR Help Avoid Healthcare Payer Fraud?

Data analytics is a powerful tool.  When I worked in technical operations for a consumer-based technology service provider, we relied very heavily on DA to identify, diagnose and very quickly fix problem areas. In short, DA is the process of analyzing large sets of data, identifying unique characteristics of particular behaviors, and then revisiting the entire data set to find other entries that have those same characteristics.

Based on an article I just read, our government is [wisely] going to apply DA to healthcare claims in order to detect fraud.  The article identifies four ways that investigators are zeroing in on fraud.  As an example of one of the four, imagine that a doctor submits claims for the same lady giving birth twice in a 6-month period.  We can safely presume that this is a false claim... certainly one deserving investigation. To see if this is an isolated incident or a broad issue, regulators can search their entire claims database for similar behavior.  The findings will reveal the magnitude of the fraud as well as identify the biggest offenders.

You can read the article here.

The question that the article prompted me to ask is whether EHR providers will be tracking the payer's "traps" and building some sort of "red flag" mechanism into their product sets to help physicians avoid fraud accusations. I don't yet know the answer.

I'd be interested to hear your thoughts... you're welcome to comment here or email them to me at the email address in my "contact" section.