What a difference a year can make! The energy at the NRTA conference this year was definitely around moving forward not just treading water. With the economic picture still cloudy and unsettled, the conversation on technology spending remained conservative. BUT, a new theme emerged – it is time to act!

The conversation around “acting” focused on three areas:

1. Spending technology $ more wisely

Replacing old legacy systems that cost too much to maintain, were not providing value, and were an IT headache to administer

Implementing software solutions that can be delivered via the Cloud

Looking beyond just lease administration and rent accounting to one solution that could also support the rest of the Store Life Cycle –market analysis, site selection, construction management, facilities management and capital planning.

Decreasing the time it takes to select and then implement a new system

2. FASB, FASB and more FASB

Getting ready for FASB changes was a hotter topic this year than last. I think that the reality of what these changes really mean to Lease Administrators and Corporate Finance Departments is really hitting home. Everyone is talking about how to get their data and processes ready, and that means making sure there is a technology platform to support these changes

3. Being ready to move in January

While budgets were not available this year, most attendees were confident that investments in new technology – as long as it provides the right value – will be available next year. The attendees who came to our booth wanted to know what to do today in order to be ready to implement in Q1.

We were busy throughout the conference giving product demos, answering questions about Store Life Cycle Management solutions, and providing FASB Preparedness advice. It felt good to be able to say “Lucernex can do that”!

Previous Blogs By Jim Short

The value of CAM Reconciliation technology
The cost of waiting to upgrade your Lease Admin Systems for FASB

I have blogged previously about the tentative nature of the efforts between the FASB / IFRS. To some of you this has may have appeared harsh, while to others, it likely seemed an accurate view of FASB/IFRS positioning. In my reading of changes to the FASB/IFRS position, it true that FASB and IFRS are making progress. The most recent accomplishments from the recent meetings of these two groups are:

Lessor Accounting
The Boards continued their discussions on the single approach to this issue, which recognizes a lease receivable and a residual asset at lease commencement. Of course, this approach raises additional issues and results in new considerations. Notably, the issues of profit recognition at lease commencement and whether there is a difference when only a portion of the asset is leased and not the entire asset.
Hence, profit recognition is an issue when:

• An owner sells
• An owner leases, or
• A tenant leases (i.e. subleases) their property.

Subleases

• The Boards seem to be headed in a consistent direction on this topic. There will be a “head lease” and “sublease” in a subleasing transaction and as such they should be accounted for as separate transactions.
• In the sublease transaction, the tenant becomes the sub-landlord, and, hence, should look to the Lessor Accounting rules for any necessary clarification of the right-of-use asset in this situation.

Short-Term Leases

• It’s simple. If the lease has a term of 12 months or less, including all its options, it will be recognized on a straight-line basis on the P&L. Of course, since accounting is as much art as it is science, if another recognition pattern makes sense within the year … use that method instead.
• The Boards also expressed support of disclosure of the repetitive nature of any short-term leases

Lastly, they discussed the unique issues related to the issue of Shariah-Compliant leases under the right-of-use model. And while nothing was decided, the simple fact that the group understands the necessary appropriateness of discussing the implication here is a testament to their commitment to the do the right thing. And we commend them!
We look forward to the Boards next update and we hope you look forward to our next update as well.

Shameless Plug

Lucernex has updated the financial engine that powers our Lease Administration / Rent Accounting and Lease Analysis solutions to support the pending changes to FASB/GAAP rules. As a result our Lx Contracts and Lx LseMod products can provide an analysis of the new vs. the old rules and can support 12 and 13 period accounting based on both the old and the new FASB rules.

Previous Blogs By Mike

CoreNet … “There is no opportunity like a crisis!”
“Tentative” – The FASB IASB word of choice!

Dallas, TX (July 7, 2011) – In a Chain Store Age article from June 30th by Katherine Field Boccaccio, the recent joint NRTA / Lucernex survey on FASB readiness was featured with the writer focusing on several indicators showing that Retailers are not yet acting on the ending FASB changes.

Read the article here

If you would like to get the full survey results click here.

We recently concluded a joint survey with the National Retail Tenants Association (NRTA) focused on the retailers’ perspective of the impact of the FASB changes and their readiness for those changes. One of the great things about collecting this much data at once is that many different dimensions can be explored. The finding that intrigued me the most was HOW retailers are planning to solve the problem and WHO they were involving in the resolution. This finding accentuated for me the vast advances the retail industry has made in both technology and process integration over the past 10 to 15 years.

As a general rule of thumb, most retailers made their first selection of a lease administration system anywhere from 10 to 15 years ago. During the selection process, a few key resources, typically the head of real estate and perhaps an accountant and lease administrator came together to evaluate a solution for THEIR singular need – retail lease administration and rent accounting.

Added to this mix is that for the past 7 to 10 years, other parts of the real estate and accounting groups have made their own selections of technology to solve their own individual needs for things like lease analysis, project management, capital or special projects, site selection, market analysis, facilities maintenance and facilities management. In most cases, these choices were made in a vacuum with a set of requirements meant to solve only their narrow needs.

What has developed, as a result, is a complicated mixture of disassociated systems (point solutions) held together by complex and fragile integrations (read: EXPENSIVE). Many retailers have found that making these selections in a vacuum and focusing on getting the cheapest product to meet a narrow set of requirements has ended up costing them FAR more money than they planned. Worse, they have not substantially improved the performance of their real estate; instead they merely automated old processes and solidified their functional silos.

Where has this led us? Ultimately I think retailers now are being much smarter and more calculating in their system selection. I am confident it’s due to lessons learned through a history of buying and implementing expensive point solution selections coupled with a maturing of the overall industry. Decision makers now understand the impact these selections have on their companies performance.

• 89% of respondents somewhat or totally agreed that they are “increasingly aware of the impact of real estate activities on the company’s key performance metrics”
• 56% also somewhat or totally agreed that new procedures were being identified to integrate procedures across multiple groups
• About half of respondents (with 22% abstaining) also said they have a task force in place to create a plan for new technology and process changes
• While 22% said Real Estate is running that task force, far more responses indicated their task forces included a combination of real estate, lease administration, accounting, finance and IT

Clearly, in replacing their legacy lease administration system, many retailers are not going to make a knee jerk point solution selection this time. Instead, as we have seen in recent sales opportunities, retailers are taking a broader look at their requirements and how they can integrate processes across the lifecycle of a store in ways that don’t just automate their processes but allow them to dramatically improve their store lifecycle management.

In the past two months we have been involved in sales processes with several retailers, each about to make a point solution selection. During the decision-making process, these companies realized they needed to be broader in their selection and look at a full lifecycle system. We will be announcing the first of these as a new client in the next few weeks, and we expect this trend to continue.

Shameless Plug

Lucernex’s has the ONLY Store Lifecycle Management (SLM) solution built from the top down FOR RETAILERS by RETAILERS. Before you jump to buy a point solution that does only one or two parts of the store lifecycle process, consider the massive savings and strategic advantage gained by implementing a SINGLE solution for market planning, site selection, project management, lease administration, retail rent accounting, lease analysis, capital project management and facilities management.

Lx Retail was purpose built for retail and is built on one platform with one database and one user interface – meaning low cost of maintenance over time and only one vendor to deal with.

Previous IWMS related Blogs

What is IWMS anyway?
IWMS? It’s Location! Location! Location!
The Power of Location Management
IWMS – Why so expensive?
IWMS in the “Cloud”
How Capital Project Management fits in an IWMS
What makes one IWMS easier to implement than another?
Why building real estate software in house is no longer financially feasible
Risks of upgrading Lease Administration Software alone or as part of an IWMS
What makes Store Lifecycle Management different from IWMS?

Dallas, TX (June 23, 2011) – Lucernex is featured in a Retail Traffic article by Elaine Misonzhnik titled “Managing the Store’s Lifecycle, All in One Place” where EVP and CIO Ken Brown and CEO Mike Nuzum discuss how Lucernex set out, in 2000, to build a single solution to manage the entire Retail Store Lifecycle process.

Dallas, TX (May 10, 2011) – Lucernex Technologies, an innovative developer of business intelligence software for retail real estate management and development, today announced that first quarter of 2011 sales included a record number of new clients switching from legacy software applications onto the Lucernex cloud based software-as-a-service solutions. These results were attributed to offering:

• Lx Retail, the only software solution designed and built by Retailers for Retailers and the first store lifecycle management solution delivered via the Cloud,
• New capabilities for forecasting and managing lease accounting that will support the pending FASB changes,
• Introduction of an updated lease administration and rent accounting module, LX Contracts, designed specifically for retailers,
• Implementation methodology that provides a quicker “time to value”,
• Integration toolkit, ensuring client integrations don’t break when upgrades are released,
• Industry leading application performance and scalability,
• Easy and rapid replacement of legacy applications.

Thanks to the popularity of these offerings and the demand for reasonably priced cloud solutions, Lucernex added several new clients including:
• Buffalo Wild Wings Grill & Bar, one of the 10 fastest-growing restaurant chains in the country, currently with over 750 restaurants, is now implementing Lx Contracts; including a free data conversion of their legacy system SLIM.
• Galaxy Partners, an Atlanta-based corporate real estate management firm that will be using Lx Retail and Lx Contracts to manage the real estate portfolios for their Retail and Corporate clients including a free data conversion of their legacy system SLIM to Lx Contracts.
• A large specialty retail chain with over 3,500 locations throughout the U.S. will be employing Lx Contracts to manage their entire lease portfolio, replacing the legacy application Siteseer.

In addition to new customers in the quarter, a 2,300 unit restaurant chain went live on Lx Retail after a successful, under budget, implementation.

“Because we are a company with retail operating experience, we can provide a solution that really works for our retailers. By delivering all of our products as software-as-a-service via the Cloud, we are now able to offer the broad functionality of our product suite at a significantly lower cost, which has led to a rise in demand for our solutions in the recent months,” said Joe Valeri, President, Lucernex Technologies. “Additionally, we have introduced Lx Contracts, our lease administration and rent accounting solution, which was designed by the original creator of SLIM, which offers the most advanced lease administration capabilities available on the market, including support for the expected FASB rules and a new vs. old FASB analysis tool that allows users to assess the impact of their lease decisions both now and in the future.”

About Lucernex
Founded in 2000, Lucernex Technologies provides real estate professionals with powerful software tools to guide them through the real estate development process while also managing any size portfolio of leased and owned properties. For nearly a decade, Fortune 500 companies in the commercial real estate, hospitality, retail, construction and engineering industries, both in the United States and Europe, have been utilizing Lucernex Technologies software solutions every day to ensure compliance, mitigate risk and empower effective growth. As an innovative leader in retail real estate solutions, Lucernex continues to grow its customer base by applying its Web-based software expertise and real estate development insight to provide advanced tools and services for business. For more information, please visit www.lucernex.com

The CFO walked brusquely into the conference room where I was doing a demo. He was wearing baggy shorts, sandals, and a navy hoodie that covered up a red t-shirt that was, as mom used to say, a wee bit too long. He sat down and began to take in my ‘performance’. About six minutes later he stood up to leave at which point one of the attendees interrupted me (politely) and asked the CFO what he thought so far.

The CFO was carrying a yellow pad. This pad was promptly launched onto the conference table along with the declaration “here’s your lease admin system”.

The remainder of the demo was, to say the least, disheartening, both from my perspective as a software rep, and from the perspective of the attendees who were frankly tired of doing lease admin using Excel. Needless to say, no sale was concluded at this particular company which, at the time, was fast growing and had over 1200 locations (and thus, at LEAST 1200 leases to look after).
I was reminded of this story when talking with a lease administrator this week about her biggest pet-peeves of the job. Most of her insights resonated with me as I’d heard many of them before, but one leapt out at me- “Other people in the company don’t understand what we do and the amount of work we do”.

Really? Is that attitude still prevalent in 2011? Retail lease administration has grown by leaps and bounds as a profession in the past 15-18 years and you’re still looking for a little respect?
I readily admit I’ve been out of the business for a while having been a stay-at-home dad for two years (thus buried under a pile of dishes and laundry), but this one takes me by surprise. I think it bears repeating that lease administrators

• are the front line for enforcing contracts that your company has spent a great deal of time, effort, and money to negotiate and close.
• can easily affect the bottom line of any company by being the primary control on real estate expenses, your company’s highest cost after human resources.

In addition, I have found in my experience, a direct correlation between a company’s market value and its dedication to quality lease administration. Companies that seek out and employ professional lease administrators and then provide them with the leeway and tools to do the job right are those that have survived the turmoil of the past few years and have seen their share prices and/or market share rebound nicely.

Hire good people, give them the framework and tools to succeed, then get out of their way!

Shameless Plug

Lucernex’s Lease Administration software, Lx Contracts, was designed by the creator of SLIM to make the life of lease administrators easier! Our SaaS pricing model, free data conversions and quick implementations, even make it easy for lease administrators to get Lx Contracts approved! And Lx Contracts is built on the same platform, uses the same database and has the same user interface as all other products within the Lx SLM Suite and can be integrated easily with any ERP system.

Curious to see how the straight-line will differ for a location under the new rules? Send me a typical rent schedule - I’d be happy to run it through our straight-line tool and provide you with a before and after snapshot free of charge.

Lucernex also offers FREE data conversions from SLIM, REM, RetaiLease and Siteseer.

Common-area maintenance (CAM) lease reconciliation is one of the biggest challenges retail finance departments face. Usually crafted by lawyers, CAM leases are notoriously difficult to reconcile. More importantly, retailers leave thousands of dollars on the table every year because there’s no easy way to match up invoices to the original CAM lease.

The endless list of line items including growth and variance caps, square footage, base-year definition, and more create havoc for retail finance departments. Far too many are forced to enter invoices by hand and conduct CAM audits through Excel spreadsheets. The manual, labor-intensive process is an anchor on productivity and cost discrepancies often slip by unnoticed.

Now there’s finally an easier way to match up invoices with the original CAM lease contract. Lucernex and Verian technologies have partnered to help ease the pain of CAM lease reconciliation. This Thursday, the two firms will present a special, no-cost Webcast on CAM lease reconciliation. Your hosts will explore automation tools to help mine savings in your CAM leases. Learn more about the value of CAM reconciliation technology.

Who should attend:
Lease administrators, analysts, managers and supervisors
Lease compliance managers
Corporate counsel
Property managers
Lease auditors
Accountants
Paralegals
Attorneys
Attendees will learn how retailers can:
Ease the pain of CAM lease reconciliation
Recoup savings from CAM lease inaccuracies
Better deal with the large amount of invoices coming in
Close the month faster and easier
Automate the invoice workflow process with email
Get more accurate accrual information
Better manage franchise agreements and royalty payments

About Lucernex
Lucernex Technologies offers industry-leading real estate software that supports management of all phases of the real estate lifecycle and provides immediate ROI in cost savings and speed to market. Lucernex Location Performance Management solutions allow you to make smarter decisions, optimize your portfolio faster, and select the best real estate for success. Learn more.

About Verian Technologies
Verian Technologies helps mid- and large-sized organizations reduce costs and increase efficiency with intelligent, easy-to-use solutions that automate the entire purchase-to-pay process including procurement, invoice processing, employee reimbursements and asset management — capturing all spend intelligence in a single database for analysis. Verian was founded in 1997 and is headquartered in Charlotte, N.C. The company’s clients include Macy’s, Recreational Equipment Incorporated (REI), Allstate Insurance, PETCO and General Nutrition Centers (GNC). Learn more.

DALLAS – (December 6, 2010) – Lucernex Technologies, a developer of business intelligence software for real estate management and development, announced today that it has hired Robert Abdul as vice president of global sales. In this position, Abdul will be responsible for directing and managing all sales initiatives for the Lucernex suite of Location Performance Management solutions for corporate and retail real estate executives. Lucernex’s solutions are currently in use by hundreds of thousands of locations in the global retail, hospitality, engineering and construction industries, as well as hundreds of corporate real estate executives and real estate brokers worldwide.

Abdul has 20 years of experience in the software industry with more than 15 years specialized in enterprise software sales. Prior to joining Lucernex, he was regional sales manager for Accruent, a provider of enterprise location management solutions. Previously, he had worked as director of sales and channel development for SaaS provider netASPx and sales director for United Systems Consultants, Inc., a Lawson Software channel partner out of New York focused on the retail and corporate vehicles.

“Robert has a wealth of experience selling corporate real estate solutions and knows the market inside and out, so we are thrilled to have him taking the lead on our sales efforts here,” said Joe Valeri, president of Lucernex Technologies. “He has been a top performing sales representative in his previous positions, and we are looking forward to seeing him bring the same success to Lucernex as we continue to expand our presence worldwide.”

The Lucernex product suite includes: Lx IWMS, an affordable integrated workplace management system that provides comprehensive location performance management for all phases of the real estate lifecycle; Lx Contracts, Web-based lease administration and rent accounting from the creator of SLIM; and Lx LseMod, the market leader in site selection and portfolio optimization financial analysis solutions for corporate and commercial real estate.

About Lucernex Technologies

Founded in 2000, Lucernex Technologies provides real estate developers and facility managers with powerful software tools to guide them through the real estate development process. For nearly a decade, Fortune 500 companies in the commercial real estate, hospitality, retail, construction and engineering industries, both in the United States and Europe, have been utilizing Lucernex Technologies software solutions every day to better manage the development lifecycle. As an innovative leader in Integrated Workplace Management System (IWMS) solutions, Lucernex continues to grow its customer base by applying its Web-based software expertise and real estate development insight to provide advanced tools and services for business. For more information, please visit www.lucernex.com.

Technology, combined with a well defined process is essential to optimizing your expense recoveries. The common mistake many multi-location companies make is not realizing that they are also in the real estate business. They see themselves as retailers or healthcare providers or bankers selling a product or as corporations providing a service and often overlook the impact of their location costs. These costs are usually the second or third highest expense on the P&L behind employee salaries/benefits and inventory. This is one area where most companies can look to find additional cost savings.

With each lease potentially having different expense recovery language, it is critical to know the details. Having the ability to reference and report on these details for each lease is important. However, having this information contained within a system that can also be used to audit key data is even more critical. Landlords are not always familiar with the intricacies of each lease and they often apply a broad set of assumptions to all leases for a property. This can lead to mistakes, usually not in the tenants favor.

Technology can be used to manage this entire process. It allows you to: know what your obligations are, track that you have received the information in a timely manner, audit the information, verify the calculations, track communication/correspondence and process any credits or payments. In addition, it will provide you the information you need to do location to location comparisons instead of just year to year comparisons; which can often surface substantial potential cost savings.

The key to achieving the best possible savings is process and technology working together. Having the world’s greatest hammer will not make you a carpenter and being a great carpenter without a good hammer will not work either. However putting the two together provides a powerful solution.

Shameless Plug

Lx Contracts, Lucernex’s comprehensive lease administration and rent accounting solution, includes CAM Reconciliation tools fully integrated into all other lease features allowing clients to find and recover discrepancies. IN Q1 2011 we will be releasing an upgrade CAM Rec tool that integrates into MS Excel (ours or yours) to make it even more intuitive to perform reconciliations. We also have a legacy lease replacement program in place until the end of the year that provides free data conversion from several of the existing legacy lease administration solutions. Lx Contracts was designed by the father of lease administration solutions, Ken Brown, who created the most popular market product, SLIM. Lx Contracts meets all OSCRE standards, is 100% Web-based and SaaS or Cloud delivered. It is not only the most user friendly and flexible system on the market; it is also one of the least expensive.

Past Blogs by Jim Short

The cost of waiting to upgrade your Lease Admin Systems for FASB