Lease Audit Leads To Acceptable Parking Cost Allocation
Global financial services firm saves $750,000 for a three-year period
A global financial services firm leased significant space in the central business district of downtown Los Angeles. The lease was negotiated to specifically exclude operational costs related to the building’s garage. Although the landlord excluded the third party parking operators cost to manage the garage; they failed to exclude other related costs incurred by the landlord to operate the garage such as utilities, insurance, security and elevator maintenance. After the client issued our report to the landlord, we were able to amicably work with the landlord to arrive at an acceptable parking cost allocation for certain expenditures that were incurred for both the building and parking garage. The end result was a significant recovery to the tenant for the inspection period and subsequent savings for the remaining lease term.
Total savings: $750,000 over a three-year period
On the surface, the landlord’s annual operating expense statement may appear to be in compliance with the lease until you peel away the layers. Our preliminary audit * analysis showed the landlord properly excluded the parking operator expenses; however, it was not clear that the other line items in fact included costs related to the parking garage.
*The term "audit" as used herein is not and should not in any way be construed to be synonymous with the terms "audit," "audit procedures," "compilation," "review" or any form of "attestation" service as described in the pronouncements on professional standards issued by the American Institute of Certified Public Accountants.
As used in this document, ‘Deloitte’ means Deloitte LLP (and its subsidiaries). Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.