$6 Could Be Costing Your DSO Hundreds of Thousands of Dollars

Are you a DSO managing your own real estate negotiations?

Does your real estate team have deep expertise in the dental real estate market and the unique nuances of each city and market where your offices are located?

Most importantly, are you confident you're securing the best possible lease terms? Do you have the time it takes to make sure of it?

Commercial real estate is the largest negotiable expense for each of your locations. This makes it critical to evaluate whether a "do-it-yourself" (DIY) approach to lease negotiations is truly the best option. A poorly negotiated lease renewal could cost your organization hundreds of thousands—or even millions—of dollars, particularly when scaled across multiple locations.

Here’s an example to put this into perspective:

Consider a DSO with ten locations, each occupying 3,000 square feet. On their next lease renewal negotiations, they overpay by just $1 per square foot (SF) and receive only $5 per SF in tenant improvement (TI) allowances out of a potential $10 per SF, based on the market and what other tenants are achieving. This seemingly small discrepancy—just $6 per SF—results in a significant financial impact:

• $1.00 per SF x 3,000 SF x 10 locations = $30,000 per year x 5-year lease terms = $150,000

• $5.00 per SF (TI) x 3,000 SF x 10 locations = $150,000

Combined, this group has missed out on $275,000 over five years. For DSOs with 40 locations, this could translate into a $1,100,000 loss. Can your business afford to lose $250,000—or even $1.1 million—every five years?

While this scenario is hypothetical, we've worked with clients who, without proper representation, would have faced similar costly outcomes. And this example doesn't even account for additional savings opportunities, such as free rent periods, annual rent escalations, or other negotiable terms that could further reduce costs.

The DIY Approach Isn’t Saving You Money

Most healthcare providers attempt to handle real estate negotiations on their own. In fact, 80% of practices take the DIY approach. But when it comes to DIY real estate, the reality is this: you may think you're saving money, but you're likely not.

Without experienced representation, you risk losing significant sums. Hiring a real estate agent specializing in healthcare not only saves you time but also ensures you're creating the best possible financial outcomes for your DSO. Partnering with a healthcare-specific brokerage could save your organization millions and position your business for long-term success.

Don’t let the DIY approach jeopardize your DSO’s growth and profitability. The potential risks are too significant to ignore.

Visit www.releaseadmin.com to learn how Re*Lease Administration’s real estate brokerage services can help your business achieve its full potential.

The Importance of Managing Lease Expirations for Multi-Location Dental Groups

The Importance of Managing Lease Expirations for Multi-Location Dental Groups.

Lease management is a crucial aspect of running any multi-location business efficiently.  According to a recent survey, 75% of dental groups reported that they have experienced lease compliance challenges, including missing key dates.  As they grow their footprint, their current management system of utilizing Excel spreadsheets just isn’t working anymore.  This is precisely why we’ve created Re*Lease Administration.

In this post, we'll dive into the significance of managing lease expirations in commercial real estate, the potential repercussions of missing lease expiration dates, and how our lease administration platform can be your lifeline to prevent missed opportunities on lease renewals.

Why Lease Expirations Matter:

Lease expirations are pivotal milestones in the life of any commercial real estate property, and they hold even greater significance when you're dealing with a multi-location dental group as an organization.  Here's why:

Market Conditions: Keeping track of lease expiration dates enables practices to align their real estate decisions with current market conditions.  This includes evaluating whether the current location is still in a prime area for patient accessibility and demographic suitability, or ensuring you are not paying more in rent (price per square foot) than say the nail salon next door.

Negotiation Leverage: When you are aware of upcoming lease expirations, you have the upper hand in lease renewal negotiations. You can proactively engage with landlords to negotiate better terms, including rent reductions or improvements to the space (on the landlord's dollar).  This helps ensure that you secure the most favorable terms for your organization.

Space Optimization: Being aware of lease expirations allows dental practices to assess their current space needs. This knowledge can help in optimizing the layout and size of the practice to ensure efficient use of space and resources.  Need another hygiene operatory?  More space in your break room? These are all things that can be negotiated in a lease renewal.

Operational Stability: Efficient operations are crucial in the dental industry. Overlooking a lease expiration date can trigger unanticipated changes in location or increased rental rates, creating operational challenges for the practice.  This can lead to disruption of patient care, causing inconvenience and dissatisfaction among patients and staff. Such disruptions can tarnish the reputation of your dental group, affecting patient trust and loyalty.

Financial Planning: Unexpected lease renewals or relocations can strain your financial resources, impacting your profitability. Lease expirations directly impact your financial planning. Knowing when leases are set to expire allows you to budget for potential rent increases, negotiate favorable terms for renewals, and allocate resources effectively. It prevents unexpected financial burdens that can strain your DSO's finances. 

Managing Lease Expirations with Re*Lease

To avoid these issues, using our lease administration software platform can be invaluable. Here's how we can help:

Automated Alerts: Our software can set up automated alerts for lease expiration dates, ensuring you're always aware of upcoming deadlines.  Have alerts sent straight to your email inbox, and never miss a deadline again.

Centralized Document Management: Keep all lease-related data in one central location, making it easy to access and manage all real estate documents. Store all lease documents securely and access them as needed during negotiations or audits.

Data Analysis: Leverage the software's data analysis capabilities to identify trends, helping you make informed decisions about your whole portfolio.

Task Management: Assign tasks related to lease renewals or relocations to team members, ensuring everyone is on the same page.

Reach out to learn more on how we can help your team manage your real estate portfolio, and ensure you never miss a lease expiration date again.

Unlocking Efficiency and Compliance: The Role of Lease Administration for Dental Organizations

It is no secret that our dental industry experiences challenges when it comes to managing its organization’s lease data efficiently. The traditional method of manually tracking lease information on Excel spreadsheets is not only time-consuming but also prone to errors, leading to potential compliance issues and missed opportunities. In this blog post, I want to shed light on why adopting our lease administration software is the right move for your dental group with multiple locations, and how we can help your team stay organized and maintain efficient records of lease data.

1. Track Lease Expiration Dates with Ease

One of the primary advantages of using lease administration software is its ability to streamline the tracking of lease expiration dates. In our fast-paced approach to organizational growth, keeping track of multiple lease agreements can be overwhelming. Missed lease renewals or terminations can result in unnecessary costs or disruptions to your operations resulting in overpaying in rent, and loss of potential landlord concessions. Lease administration ensures that you receive timely notifications for upcoming lease expirations - up to 3 years in advance, giving you ample time to negotiate new terms or plan for relocations if needed.

2. Achieve Lease Accounting ASC 842 Compliance

The new lease accounting standard, ASC 842, requires companies to report lease obligations on their balance sheets. Compliance with this standard is crucial for dental groups, as it enables stakeholders to make informed decisions about the organization's financial health. Manual tracking and calculations of lease accounting data on spreadsheets can be error-prone, and extremely time-consuming, leading to non-compliance risks. With Re*Lease Administration, you can rest assured that your lease accounting is accurate and meets ASC 842 requirements, helping you avoid penalties and maintain transparency with investors and lenders.

3. Efficiently Track Tenant vs. Landlord Responsibilities

Lease agreements often involve complex arrangements regarding responsibilities and costs, such as property maintenance & repairs, insurance, taxes, and utilities. Manually tracking these responsibilities on spreadsheets can lead to misunderstandings or disputes between your organization and the landlord at each site.  Our focus is to remove the uncertainty by providing a centralized platform to document and track tenant and landlord responsibilities throughout the lease term. This transparency helps foster better landlord-tenant relationships and prevents the need to hire an attorney to correctly identify each item as it arises.

4. Cost Savings/Improved Efficiencies for Your Team

The Re*Lease Administration team helps identify cost-saving opportunities, negotiate favorable lease terms, and avoid penalties, ultimately strengthening the dental group's financial position. We fully understand the time commitment managing your real estate portfolio can take, and our goal is to help alleviate some of this responsibility. By adopting our lease administration software, your group can streamline lease management processes, which translates into increased efficiency and reduced administrative burdens. With easy access to all lease data in one place, you can quickly retrieve essential information, make informed decisions, and respond to queries promptly. This streamlined approach frees up your team's time, allowing them to focus on providing quality patient care and growing your dental group.

Overall, Re*Lease Administration offers your dental group numerous benefits over manually tracking lease data on Excel spreadsheets. From tracking lease expiration dates and ensuring compliance with ASC 842 to efficiently managing tenant and landlord responsibilities, our software empowers your organization to stay organized and run smoothly. Investing in lease administration software is a strategic move that can lead to significant long-term savings and improved operational efficiency. Allow us to help your dental group strengthen its financial position, minimize compliance risks, and focus on delivering exceptional dental services to patients. Reach out to learn more about how we can work together.