2021 — what an Epic year! And not just because Epic Games was one of our first new subscribers in 2021! But also because 2021 brought LeaseCalcs an amazing cadre of new clients like Anaplan, PepsiCo, Cengage and E&J Gallo, to name just a few. This past year proved, yet again, that world class companies choose LeaseCalcs when they want world class lease accounting, lease administration, financial analysis and transaction management software.
A few key metrics for 2021:
- 100% of our Corporate clients renewed their subscriptions. Again!!
- 29% year over year revenue growth, driving tremendous profitability — and incredible bonuses for our entire team!
- Surpassed 10,000 active users of LeaseCalcs, with more than 7.5 billion square feet of real estate leases and over 1.2 million equipment lease assets under management. Whoa!
- 96% of new clients in 2021 were referrals from existing clients or key partners such as KPMG, RSM, EY, Deloitte, etc. In other words, when you have a world class application, you don’t have to spend much on advertising.
A few other fun achievements:
- New clients included a lot of firms that previously selected a competitor’s application, but then realized those applications couldn’t actually perform as needed. If you chose the wrong horse, LeaseCalcs can get you back in the race. Fast!
- New clients also included several “repeat” clients. You know you have a world class application when your client’s Chief Accounting Officer or Controller moves to a new company and the first thing they do is call you to get LeaseCalcs at their new firm!
- We released an entirely new product module, RE:Act, providing end-to-end transaction / project management capabilities, purpose built for our corporate real estate and commercial real estate brokerage clients. Check it out!!
Here’s to 2022 … Let’s go!!
Oh … and we’re hiring across all roles, including engineering, sales and support!
Closing the book on 2020 and looking back, I have so much gratitude for our resilient team and incredible clients. Through the midst of a pandemic, LeaseCalcs had another year of stellar growth – in revenue, total clients, profitability and headcount. While our world class SaaS application deserves some credit, the world class clients that continue to pick LeaseCalcs as their lease accounting, administration and analysis solution deserve all our thanks. This is especially true of the new clients – like the few examples below, among many others – we were honored to partner with in 2020.
As great as 2020 was, 2021 is already off to an epic start! Aside from the new clients who have already subscribed these past few weeks, we’re also excited to announce a major new upgrade to LeaseCalcs – full project management for real estate transactions!
Our Broker and Corporate Edition users will be able to manage every aspect of a real estate transaction, including budget approvals, tasks, timelines, teams, responsibilities, messages, exportable reporting, email alerts, etc., all integrated with our incredible financial analysis capabilities. So, here’s to an epic 2021 and thanks, again, to our clients and team for a great 2020!
COVID-19: A Tale of Two Rent Concessions
In the words of Charles Dickens, “It was the best of times, it was the worst of times.”
Two tenants each received a $150,000 rent concession from their landlord. One tenant saw an immediate $150,000 improvement in net income, the other only $16,666. As a broker helping tenants make important decisions about their business, you must understand why this happened before you finalize another rent concession / lease restructure.
COVID-19 related rent concessions – rent deferrals or abatements – take many forms. Often, they are combined with a lease extension, or even a contraction, expansion and/or an early termination. But the way these concessions have to be accounted for differs depending on what’s happening alongside the rent concession.
For example, consider this basic example of a tenant who currently has 24 months of remaining term and its monthly rent is $50,000. Assume the landlord agrees to defer the rent for April, May and June and offers two different options:
1. Leave the lease term as is with 24 months of remaining term, and pay the $150,000 of deferred rent in three equal monthly payments in the last three months of the term.
2. Extend the term of the lease by three months and repay the deferred rent during those three extra months.
These sound pretty equivalent, since in both scenarios, the same amount of rent is being paid. However, the accounting outcomes can be quite different.
In the first scenario, not only will the tenant preserve cash, but it would be allowed to credit its P&L by $150,000 in Q2 … right now! That could be hugely important for a company’s profitability today. In the last three months of the term, they would add the $150,000 that is then being paid to their P&L expense, but by that time this disruption will behind us and they can plan for that added expense accordingly.
In the second scenario, because the lease term was extended, your client cannot credit its P&L by $150,000 in Q2. Instead, the lease accounting rules require them to amend the lease, recast the rent schedule and add the three months of term. This results in a new calculation of straight line rent on their P&L, which will only reduce their P&L expense by $5,555 per month ($150,000 / 27 months). If your client is trying to shore up profitability right now, that’s only a $16,666 improvement in its P&L in Q2.
So, it’s really important to think beyond the cash and understand what your client cares about and what their options are.
To help you, LeaseCalcs has developed a COVID-19 Lease Accounting Guide that spells out all of the different real world scenarios, the accounting options and implications. Do you know which option is better for your P&L right now? Which option helps improve balance sheet metrics? EBTIDA?
Download LeaseCalcs’ guide to dealing with COVID-19 related lease concessions so you and your client make the right decision. Better yet, share it with them today!
COVID-19, Rent Concessions & Lease Accounting
COVID-19 related rent concessions take many forms, but new guidance from the FASB & IASB oversimplifies the real world scenarios. These six scenarios explain what every tenant or lessee needs to know to comply with the new COVID-19 lease accounting guidance from the FASB & IASB.
- Pure rent abatement / forgiveness.
- Rent deferral, with the rent to be repaid later with no other change to the lease.
- Withholding of rent. Not a deferral, but a unilateral decision to preserve cash.
- Rent abatement or deferral, but with a contraction in leased premises or assets.
- Rent abatement or deferral, but with a lease modification to early terminate the lease.
- Rent abatement or deferral, but with an extension of the term and/or expansion of premises / assets under lease.
LeaseCalcs’ guide to dealing with COVID-19 related lease concessions and amendments will help you get your accounting right, while also helping you choose the correct options to best protect your financial results.
Do you know which option is better for your P&L right now? Which option helps improve balance sheet metrics? EBTIDA?
What Finance and Corporate Real Estate must know to improve outcomes and reduce risk.
Join our nationally recognized experts in lease accounting and commercial real estate transactions for this exclusive event in Houston. Learn what finance teams need to know about real estate lease negotiations, and what real estate teams need to know about accounting, in order to avoid unpleasant surprises with the new accounting rules.
- How the new rules are changing real estate transactions and strategy.
- How can renewal or termination options help or hurt your firm’s financial performance.
- Why simple changes in your lease negotiations can dramatically improve financial performance.
- Learn effective strategies to minimize the impact of the new standards.
- How free rent, TI allowances vs. “turn-key” deals and even co-working contracts effect EBITDA performance.
- Learn how ASC 842 / IFRS 16 standards are already affecting relocation decisions, subleases and profitability.
Jeff Manley | Senior Managing Director & Board Member | Savills
Exciting news from LeaseCalcs: SOC 1, Type 2 Certification
Irvine, CA – LeaseCalcs, Inc. is an enterprise-class Software-as-a-Service (SaaS) patented lease analysis, accounting – including the FASB & IASB’s new lease accounting standards – administration, market insights and business intelligence application for commercial real estate, finance, accounting professionals and C-Suite executives. With a focus on commercial real estate and equipment leases LeaseCalcs is the only application that can take you from contemplation of a lease “deal” to the expiration keeping track of all the revisions, amendments, reassessments, journal entries and keeping the accounting accurate for both current standards and new standards.
As companies begin looking for solutions to the FASB/IASB accounting changes it is imperative to have transparency for cloud-based service providers’ internal controls over financial reporting. Completing the SOC 1, Type 2 certification shows our commitment as your trusted partner for financial reporting.
The largest commercial real estate brokerage firms and leading corporations around the globe use LeaseCalcs to improve their business processes, financial performance and market intelligence. To learn more about LeaseCalcs visit www.leasecalcs.com and follow on Twitter at www.twitter.com/leasecalcs.
To learn more, feel free to schedule a demo, or watch the fast paced eight-minute overview of the Corporate Edition of LeaseCalcs.
If you build it, they will come. But if you build it well, they will stay.
As 2019 begins, a quick reflection on 2018, with thanks to our clients, partners and supporters who helped us achieve great things in 2018. Some highlights:
- 100% renewal rate for Lease Accounting & Admin clients
- Higher year-over-year revenue per subscriber
- A 3X increase in annual revenues (well, a hair shy of 3X, but who’s counting.)
- Over 90% of new subscribers – like those in the graphic – were referred to LeaseCalcs by another client or one of the big global accounting firms.
LeaseCalcs began with the idea to create an integrated lease analysis, lease accounting and administration platform, which would seamlessly provide commercial real estate market insights. Eight years later, LeaseCalcs is the leading, patented solution for the lease accounting changes affecting companies, both public and private, around the world. And we’re doing so in a way that isn’t just better, but is also budget friendly. None of this would have been possible without the strongest team I’ve ever been a part of. They are smart, dedicated and nimble, with a strong desire to help our clients succeed. This is why our clients stay, and why we will continue to build – and improve – LeaseCalcs well.
Now, bring on 2019!
If your company or your client is using an older lease administration program, you might have already heard the distress calls.
You see, a lot of companies are just learning that their leases – and their lease accounting project – are trapped in the harbor. Their existing system won’t – or can’t – help them get into compliance with the new lease accounting standards. With less than seven months before the new standards take effect for public companies, LeaseCalcs is like the Coast Guard for these firms.
We have successfully migrated other clients off of all of the other major lease administration programs, and have the ability to easily import all of their lease data as a result. In other words, LeaseCalcs can help your clients get their leases out of the harbor and help them navigate their way – quickly and easily – to compliance with ASC 842 and/or IFRS 16.
LeaseCalcs’ patented, award-winning, lease accounting and lease administration platform is fully GAAP and IFRS compliant. We have scores of global, public companies already using LeaseCalcs for all of their lease accounting and administration needs. Some of our clients even adopted the new lease accounting standards early – on January 1, 2018 – meaning LeaseCalcs is being used right now to drive financial reporting for public companies around the world.
The long awaited, and greatly debated, changes to lease accounting standards under GAAP and IFRS are upon us. As CRE teams and their colleagues in corporate finance move toward implementing these new standards, many are surprised by the financial statement outcomes.
LeaseCalcs’ latest white paper, as published in Corporate Real Estate Journal, explains why two identical leases will yield very different accounting impacts for different companies, and – more importantly – how those differences affect balance sheet, shareholder equity, net income and EBITDA outcomes.
The paper discusses why despite the fact that the FASB’s and IASB’s stated intentions were to achieve consistency and transparency in lease accounting, neither objective was really achieved. CRE executives looking to make an impact with the C-Suite need to understand these nuances in order to adjust strategies going forward.
The forthcoming Part 2 of this paper will focus on steps CRE directors, their advisors and counterparts in finance can take to optimize various financial impacts in light of the new standards.