If you've fallen into managing your company's real estate portfolio, you might feel like you're awash in new terminology, confused by strange ways of doing business and generally overwhelmed. The good news is that arguably the most important part of running your company's portfolio -- key date management -- is also the simplest.
To be clear, taking care of the key date list for your portfolio isn't a throw away job, and it isn't easy. Every lease has multiple important dates that come up either monthly, yearly or at other irregular intervals throughout the lease's life and when you multiply those over every lease in your company, you could end up with hundreds of dates. Luckily, though, tracking them is no harder than tracking any other date. If you can keep your calendar, you can perform key date management.
Here is a list of seven typical key dates that come up in leases so that you can keep an eye out for them and understand what they mean.
Effective Date
This key date is the basis for when all dates in your lease get calculated. It's the date that your lease officially starts, although it might not be the date that you move into your space or that you start paying rent.
Move-In Date
The move in date is when your company starts to physically occupy the space. Typically, it is after the effective date since the space has to be built out for your needs.
Rent Commencement Date
This is the date on which you have to start paying rent for your space. For instance, if you sign a lease with an effective date of February 1, but you get four months of free rent, you would have a rent commencement date of June 1. Typically, rent is due every month on the day of the rent commencement date.
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Anniversary Date
Usually, when leases change, they change on the same date as the effective date. A lease with an effective date of March 1, 2015 would have anniversary dates on March 1, 2016, March 1, 2017 and on. That anniversary date is typically when lease increases get calculated.
CAM Reconciliation Date
If your lease has provisions where you pay common area maintenance or management charges, your landlord will usually prepare a budgeted amount for you to pay and then provide a reconciliation at the end of the year. You will then either receive a check for your overpayments or a bill for underpayments. Typically, the CAM Reconciliation Date is your Anniversary Date or the first of the calendar year.
Termination Date
The termination date is the date on which your lease ends. Typically, you have to be out of the space and deliver it back to the landlord in original, broom-clean condition on this date.
Option Notification Date
If your lease has options to renew or extend, they typically require you to notify the landlord that you intend to use them prior to the termination date of your lease. If you like your space and want to stay, the option notification date, which is usually anywhere from three to 12 months before your termination date, might be the most important key date in your lease. After all, if you miss that date, the landlord can cancel your option and either raise your rent or refuse to renew your lease.
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