NLA Review Finds $1.1M in Unpaid Operating Expenses by Client’s Subtenant

Amount Saved: $1,100,000
Recovery Type: Subtenant Billing; CAM/Operating Expenses
Client Use: Office

Overview:

As part of our lease administration service, National Lease Advisors (NLA) supports clients by managing subtenant invoicing. During onboarding for a new client, NLA conducted a review of historical subtenant payments to verify alignment with lease terms. This review uncovered a major oversight—no operating expenses or utilities had been passed through to the subtenant, despite the lease requiring it.

Challenge:

The client had a sublease in place under a base year lease structure, where the subtenant was responsible for increases in operating expenses and utilities beyond the base year. While base rent had been collected consistently, the client had not billed the subtenant for any CAM, real estate taxes, water, or electricity charges above the base year—leaving substantial revenue uncollected.

This billing gap went undetected for years, resulting in significant underpayment by the subtenant and missed income for the client.

Solution:

Upon identifying the discrepancy, NLA took the following steps to correct the issue:

1. Lease Review: Analyzed the master lease and sublease terms to confirm the subtenant’s obligation to pay for OpEx and utilities.
2. Account Reconciliation: Calculated all past-due charges for CAM, real estate taxes, water, and electricity based on lease provisions and actual costs.
3. Client Support: Provided the client with a complete billing summary and supporting documentation to invoice the subtenant for all unpaid amounts.
4. Ongoing Invoicing: Implemented accurate monthly invoicing moving forward to ensure full cost recovery throughout the remaining lease term.

Results:

• Total Rent Recovered: $1,100,000 in past and future subtenant charges
• Full Compliance: Subtenant now billed correctly for all OpEx and utilities per the lease
• Future Prevention: Ongoing subtenant billing now integrated into NLA’s lease administration services to avoid recurrence

This case highlights how overlooked sublease terms can result in substantial revenue loss—and how a proactive lease administration partner like NLA can recover it. By identifying the issue and implementing a correction, NLA delivered over $1 million in additional rent revenue to the client.