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
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.
Recent surveys from the Big 4 show companies expect implementation of the new lease accounting standards to cost millions and take months, if not more than a year, to complete.
LeaseCalcs’ customers are proving them wrong!
In eight minutes, you’ll learn how LeaseCalcs’ customers:
- Negotiate better leases
- Improve accounting processes
- Make their corporate real estate, finance and accounting teams more efficient
- Automate journal entries, all mapped to their ERP system(s)
- Get real estate and equipment lease functionality in one platform
What makes LeaseCalcs so different?
LeaseCalcs was developed in response to the challenges brought on by the new standards from the FASB and IASB, and is already in use by some of the largest global companies to handle current and new lease accounting, under GAAP or IFRS – or both!
Ready to learn more?
View the video or schedule a demo to get a personalized insight and see how LeaseCalcs will help you save tremendous amounts of time and money while you comply with the new accounting standards.
RE:Port is the new game changing upgrade to LeaseCalcs’ Broker Edition, giving brokers the unique opportunity to add even more value to their clients through our robust, yet intuitive, portfolio-wide financial reporting, analytics, lease accounting and administration tools.
RE:Port enables brokers to support clients with smaller lease portfolios with the same tools the “big” tenants use to manage and administer all of their leases, without an additional cost. RE:Port packs powerful portfolio-wide dashboards, analytics and insights, giving brokers a whole new way to collaborate with clients in real time and automatically generates lease abstracts, critical date alerts and even creates the custom reports clients need to get deals approved, all while solving the challenges of the new lease accounting rules.
Unlock the next level of lease accounting
If you are an existing subscriber to the Broker Edition of LeaseCalcs, you already have the RE:Port capability added to your account, at no additional charge. To activate RE:Port and all of its value, all you need to do is follow a few simple steps best described in this video:
Still not a LeaseCalcs subscriber, but interested in learning more?
Imagine knowing in minutes how any deal impacts your client’s earnings, EBITDA and shareholder equity. What if you could easily adjust the negotiations to improve the outcome?
Let’s talk! Schedule a live demo of LeaseCalcs at your own convenience and learn how LeaseCalcs is a true differentiator for brokers all around the world.