Accurate Reporting of Leases Required by Sarbanes-Oxley

In the wake of financial disasters like Enron, Congress passed the Sarbanes-Oxley Act of 2002. The underlying thrust of SOX is to make sure that financial statements from publicly held companies are accurate so investors know what they are buying.

Public companies have beefed up internal controls so their CEOs can vouch for their financial statements, and many private companies have followed suit as accounting standards change. Real estate holdings, both owned and leased, are often a major part of a company's net worth, so greater accuracy is sought in accounting for the costs and possible financial risks related to leased real estate.

For instance, if there is no renewal option for a tenant, what are the potential costs of business interruption and relocation? These are costs that must be reported under SOX. And even when a renewal of a lease is possible, the potential future increases in rent, operating expense, and cost of building services must be part of a public company's financial disclosure.

In terms of the actual costs of leasing property, SOX has a provision that requires public companies to be able to report information to investors "on a rapid and current basis." This requires that data on leases be accurate, up to date, and available electronically. That includes all annual facility costs (net of incentives) such as rent, operating expenses, parking fees and amortized value of tenant improvements.

These are just some examples of how SOX is affecting commercial real estate accounting. Look for more as the industry adapts to the new requirements.

Fact Finding vs. Fact Giving When Viewing Space

One of the key stages in looking at alternative sites for your business is the viewing or tour of the prospective space options. How you look at the space sets the foundation for the negotiations of your lease.

Ultimately, looking at prospective space is a fact finding mission. You want to find out as much about the market and the particular buildings you are viewing as possible. For in this case, information is paramount. The more you have, the more leverage you have with any potential landlord. The converse is also true, the more information the landlord has about you and your business, the more leverage they have.

Agents for landlords love it when prospective tenants come in the door and spill their guts telling the agent (too) much about their business and how much they like the building, the location, and on it goes. With each statement, the agent knows the position of the landlord is strengthening.

But remember, this is not a fact giving mission, it is a fact finding mission. When touring space, the best approach is to employ an age-old tactic: If you have a question or criticism, voice it; but if you have something good to say, write it down. The landlord's agent is just that, the landlord's agent, not yours. Anything you say can and will be held against you. The landlord's agent is duty bound to inform the landlord of any knowledge they gain. Letting the agent know you "love the space" could cost you.

Would you go into an African jungle without a guide? Then, don't go into the jungle of lease negotiations without your expert guide. Call our office and gain the advantage over building owners with our market knowledge and expertise on your side.

Tech Terms for the Holidays

If you're not shopping for a new electronic device, you're probably getting one as a gift. But with so many new products out there, knowing how things work is getting more and more difficult, especially if you don't know the difference between an LCD and a DVD. Luckily there are Web sites that can help, full of product reviews and explanations of terms.

A good place to start is by typing "technology reviews" into your favorite search engine on the Internet. Your first two hits should be zdnet.com and cnet.com. They're both part of the same online network, but ZDNet is more business technology oriented, and CNET is more consumer oriented. Both sites have reviews, product ratings, and price comparisons you can search by brand name, price, or product. The extensive archives of product reviews and blogs by experts can be full of valuable insights on how technology products perform.

If you're more interested in computers, the two biggest magazines in that field have great websites, pcworld.com and pcmag.com. In addition to information about every computer, printer and accessories, they also cover digital cameras, cell phones, and some other devices. There's a great holiday gift guide at pcmag.com and it is probably the most consumer-friendly of the sites, with ample articles that explain the various technologies.

All these sites will help you shop as well, but you might want to compare prices at one of the dedicated shopping sites such as amazon.com, pricegrabber.com, or bizrate.com. Yahoo and Google also have shopping sites with price comparisons. Happy Holidays!

2006: Another Great Year!

During this time of year we like to remind ourselves of all the things for which we are thankful. Among those things, we are so appreciative of you, our clients, who allow us to do what we love to do every day. Thanks to all of you, and happy holidays:


Aderans Research Institute Inc
Advanced ENT
Anodyne Health Partners
Arel Communications and Software
Atlanta Business Bank
Atlanta Coffee Supply Group
Babush, Neiman, Kornman & Johnson
Bank of New York
Benchmark Technology Group
CDE Services
CaraVita Senior Care Management
CH2M Hill
City of Sandy Springs
ClickFox Inc
Core Concept Inc
Culpepper & Associates
Document Technologies Inc
ENT of Atlanta
EOS Marketing & Communications
Focus Brands Inc
GEMU Valves Inc
Georgia Cancer Specialists
Georgia Eye Associates
Gerber Agri International
Given Imaging Inc
Huron Consulting Group
iCap Realty Advisors
InfiStar
INTENT MediaWorks
Laureate Medical Group
Levenson & Brinker Public Relations
Levenson & Hill
Linx Partners LLC
MarketSquare Solutions
Mazor Surgical Technologies Inc
National Flood Services Inc
North American Bioproducts Corporation
Pediatric and Adolescent Medicine PA
Pharmasset Inc
Plastic Surgery Centre of Atlanta
The Procaccianti Group
RCMS Group LLC
Roark Capital Group
Sandy Springs Pediatrics and Adolescent Medicine PC
Sanuwave Inc
Shapiro Capital Management LLC
Stratature Incorporated
Suzuki Learning Center
Todd Walters & Associates
Tribe Inc
TUG Technologies Corporation
United Americas Bank
Urology of Atlanta
US Franchise Systems Inc
Value Music Concepts Inc
Value Prism Consulting
Vigilar Inc.