AM's Budget Review Process
Questions for the asset managers out there (preferable in office, retail or industrial).
Do you have a standard process that you follow when reviewing budgets created by the property manager? For example, are there certain items that you'll calculate yourself to ensure accuracy (i.e. base rent, parking, debt, etc.)? If so, which are ones are you typical calculating/looking at?
Alternatively, is it best to just compare prior years actuals to the proposed budget and investigate any line-items that have a suspiciously high variance?
I'm not an AM, but I'm curious how you guys do it because it sounds like most people dread reviewing budgets around this time of the year.
Thanks for any help!
Industrial AM here. We have a ton of assets, so for efficiencies sake I definitely try to just compare prior year's actuals to the proposed budget and investigate any line-items that have high variances. A lot of the time the biggest variances are non-controllables (our region has finally started chasing us on taxes...), but we do what we can. Will also take a look at what tenants have controllable CAM caps and adjust accordingly.
I look meet with PM's and go through all the line items and assumptions that were used. I don't manually calculate the income, but I will double check the rent rolls they're using to make sure they're up to date/accurate. I'm curious how others approach it.
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