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Real (estate) innovation.Audit Case Study SynopsesTM

Contents

Case Study Synopses™

1 / Real (estate) innovation. Copyright © 2001-2016 RRG and/or its licensors.

Legal Information: The RRG name, the terms RRG, RRG Properties, RRG Audit Portal, RRG Portal, RRG Project Management Portal, Audit Accuracy, Audit Timeline, Audit Timespan, Audit Return,

RRG @ Work, Transparency Strategy, Profit Engine, Portfolio Score, Portfolio Score Technology, Audit View, RRG Audit View, Recapture, Recapture Framework, RRG Insight, Knowledge Engine, Knowledge

Capital, Audit Source, Knowledge Source, Resource Value, Exposure Value, Exposure Value Model, Dynamic Assessment Model, RRG Index, RRG Audit Index, RRG Knowledge Base, RRG Knowledge

Center, RRG Training Center, RRG Workspaces, RRG Meeting Place, RRG Audit Solutions, RRG Lease Audit Solutions, RRG Education, RRG Insight, RRG Focus, RRG Direct, RRG Direct Access, RRG

Link, RRG Mobile, RRG Vision, RRG Audit Engine, On-Site Systems, Audit Source, RRG Audit Academy, RRG Academy, Audit Academy, RRG Audit Institute, Audit Institute, RRG Institute, RRG Summit,

RRG Capital, RRG Ventures, RRG Global, RRG Investments, RRG Consulting, RRG Consulting Services, RRG Government, RRG Government Services, RRG Research, RRG Images, Image Vault, RRG

Virtual Audit, Virtual Auditing, Virtual Audits, Focus First Systems, Campaign Scope, Audit Cycles, Landlord Type, Property Manager Type, Macro-Standard Category, Macro-Savings Type, Micro-Savings

Type, Savings Adjustment Model, Landlord Micro-Exposure Category, Landlord Macro-Exposure Category, Process Status Code, Audit Status Code, Preliminary Information Request Letter, PIRL, PIRL

Information, Information Request Letter, IRL, IRL Information, Schedule A, Schedule A Information, Schedule B, Schedule B Information, B, Schedule AB, AB, Schedule AB Information, Additional Request

Letter, ARL, ARL Information, Lease Audit Workbook, AWB, Clarification of Findings Report, COFR, Draft Report, DR, Final Report, FR, Payment Request, PR, Audit Campaign Process and Strategy,

ACPS, Lease Audit Priority Report, LAPR, Information Gathering Log, IGL, File Deficiency Report, Lease Information Status Summary, LISS, Reconciliation Statement Tracking Report, RSTR, Rolling Audit

Recovery Report, RARR, Lease Audit Status Summary, LASS, Audit Campaign Synopsis, ACS, Reconciliation Statement Memo, RSM, Global Authorization Letter, GAL, Customized Authorization Letter,

CAL, Audit Closure Package, ACP, Audit Summary Memo, ASM, RRG Annual Cost Comparison, Audit Scope, Audit Window, RRG Quicknotes, Quicknotes, Cost Containment Services, Efficiency Through

Awareness, Efficiency Through Transparency, Efficient Cost Containment, Knowledge Based Profitability, The Lease Auditor of Choice, Corporate America’s Cost Containment Solution, Cost Containment

Through Corporate Responsibility, Cost Containment Solution, Knowledge Driven Results, Macro Recovery Opportunity, Micro Recovery Opportunity, Audit Efficiency, Audit Efficiency Ratio, Closure

Efficiency, Closure Efficiency Ratio, Portfolio View, Portfolio Dashboard, Savings View, Recovery View, Whitepaper Series, Thought Series, RRG Index, Audit Index, Recovery Index, Savings Index,

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Introduction 2

Audit Case Study Synopses 7

Offices 114

Case Study Synopses™Case Study Synopses™

RRG is the world’s leading provider of enterprise-wide lease audit and cost control solutions.

RRG is an industry defining organization focused on driving cost efficiencies through the real estate and finance systems of private and public sector institutions.

Our core lease audit services have been developed and refined to provide broad avenues through which to see, harness and interpret trends in both data and operating methodology in order to optimize portfolio structure, economics and compliance.

We are uniquely positioned to service any organization anywhere in the world. Our practice area extends globally creating economies that reduce response time, increase efficiency, compress process cycles and enhance overall service delivery. This unparalleled reach and operating scale provide distinct and dynamic opportunities to deliver the most robust, thorough and accurate lease audit and cost containment services available.

3 / Real (estate) innovation. Copyright © 2001-2016 RRG and/or its licensors.2 / Real (estate) innovation. Copyright © 2001-2016 RRG and/or its licensors.


Material cost savings opportunity exists within every real estate portfolio.

The precision of our services is unequaled. We are consistently successful in leveraging technology, data and analytics to achieve our trademark results.

Our audit programs are comprehensive and customized to our client partner’s operational strategies, finance structure, accounting framework, real estate model, reporting requirements and overall governance objectives.

The provided case studies detail select audits performed and savings identified, negotiated and secured by our professional teams. Each audit is customized to address the intrinsic areas of concern and supported by highly technical reporting that is both quantitative and qualitative. These audit examples will highlight the scope and depth of our services while further reinforcing our capacity and scale in delivering our solutions globally.


Case Study Country Industry Page

New York, New York United States Consulting 8

San Francisco, California United States Banking 12

Washington, DC United States Legal 16

Toronto, Ontario Canada Banking 20

Chicago, Illinois United States Banking 24

Beijing China Financial Services 28

Los Angeles, California United States Entertainment 32

Sydney Australia Financial Services 36

Boston, Massachusetts United States Computer 40

Miami, Florida United States Banking 44

Irving, Texas United States Telecommunications 48

Montreal Canada Financial Services 52

Philadelphia, Pennsylvania United States Health Care 56

Seattle, Washington United States Technology 60

New York, New York United States Financial Services 64

Denver, Colorado United States Energy 68

Bangalore India Telecommunications 72

Nashville, Tennessee United States Telecommunications 76

Madrid Spain Technology 80

Houston, Texas United States Energy 84

Atlanta, Georgia United States Banking 88

Carmel, Indiana United States Government 92

Newport News, Virgina United States Aerospace 96

Minneapolis, Minnesota United States Banking 100

Dallas, Texas United States Energy 104

Case Studies



New York New York

RRG’s audit encompassed three (3) operating years and two (2) ownership entities.

Initially, the landlord was unable to provide the requested information for one (1) of the operating years noting that the documentation did not transition as part of the building sale. RRG coordinated with representatives of the prior ownership which happened to be a dissolved trust in order to locate the missing, archived records and obtain a the complete document set.

Through the audit, RRG confirmed material overcharges surrounding the improper application of cleaning credits. The landlord had received cleaning credits from the janitorial service provider for space that the client leased, but did not actually occupy and thus was not being cleaned. Rather than providing the full amount of the credits, the landlord actually inflated the charges by applying a “gross-up” factor to the overall cleaning costs to reflect costs as if the space was being cleaned and then charged back the client its pro-rata share of same. As such, the client was being charged twice for space that was not even cleaned and that it did not occupy. RRG unwound the calculations and applied the proper accounting methodology to align the cost structure with the cleaning contract terms.

Additionally, RRG noted several amortization entries that did not qualify as operating expenses pursuant to the terms of the lease. For several years, the landlord had charged various non-qualifying capital expenditures to operating expenses in the form of amortized expenses. The lease was very specific about the types of allowable capital expenditures which only included government mandated improvements, labor saving improvements and “in lieu of repairs” improvements.

Following RRG’s completion of a utility usage analysis, we were able to confirm that, as required, all tenants in the building were separately metered for usage and that the electricity charged to operating expenses only represented the common area electric. However, RRG determined following a review of the general ledgers, supporting documents and the utilities report that the pass through included gross receipts tax which was distinctly excluded per the requirements of the lease. The source of the issue was that the landlord was generating the utility cost data from a third party prepared usage report where such tax components were inappropriately, embedded in the utility expenses charged to the common area.

The landlord initially disagreed with all the audit findings, but following the conclusion of the negotiation, refunded all amounts represented within the audit reports.

Industry Type

Consulting

Case Study Synopsis™ (3564)New York, New York, United States

8 / Real (estate) innovation. Copyright © 2001-2016 RRG and/or its licensors. 9 / Real (estate) innovation. Copyright © 2001-2016 RRG and/or its licensors.

Audit Summary

Audit Savings

Audit Savings / Square Foot

$3,162,883

$12.08

Landlord TypeRegional

Corporation

Property Manager Type

Regional Corporation

Self-Managed Yes

CampaignCommencement

Q2 2001

Representation Type

Exclusive Service Provider

Campaign Scope North American

Portfolio

Audit Cycles Annual/Recurring

Audit Accuracy™ 100.00%

Audit Timeline™ 137 days

Audit Timespan™ 108 days



Savings Segmentation by Micro-Savings Type™

Cleaning (Reimbursement (No Application))

$1,741,803

Electricity (Overstatement (Actual))

$399,615

Capital Expenditures (Removal)

$259,590

55.07%

12.63%

8.21%

Cleaning (Gross-Up (Incorrect Application))

$761,875

24.09%


San Francisco California

Our team’s audit covered multiple operating years and two (2) ownership entities.

Upon the commencement of the audit, we noted that the insurance amounts charged during the base year were not presented in a manner consistent with that of the subsequent years. Following a review of the support for each annual policy and interviews with the carriers and insurance brokers it was determined that the insurance expenses were not completely recorded. The amounts actually recorded were solely based on amounts paid in the base year as opposed to the amounts applicable to the base year. Our team also discovered that the entire staffing model was altered due to a change in the ownership entity. Numerous individuals were added to the on- site staff operating the building thus drastically affecting many general ledger accounts, however parallel adjustments, as required by the lease, were not made to the base year.

The new ownership entity also owned additional buildings throughout the city and the audit uncovered that certain expenses related to these additional buildings were being captured and passed through in the subject building under audit. Our audit team supported each sub-category expense and built an appropriate allocation schedule to be applied to the expenses in question. Our team also adjusted the management fee charged in each year. The expense in the base year was adjusted significantly upward as our team was able to negotiate to have the free rent, which was granted as a leasing incentive for the client to occupy the space, included in the calculation of the base year management fee.

Furthermore, for each subsequent year, our team removed all revenues associated with utility reimbursements and made a consistency correction due to the landlord changing the calculation method from “revenues billed” model to “revenues collected” model following the ownership change. The landlord agreed to adopt the audit methodology generating additional, annual savings through the remainder of the lease.

Industry Type

Banking

Case Study Synopsis™ (335)San Francisco, California, United States


Audit Summary

Audit Savings


$1,448,602

$7.81

Landlord TypeInvestor

Consortium



Self-Managed No


Q4 1999

Representation Type



Portfolio








Base Year (Payroll (Understatment))1

$195,977

Management Fees (Offset Method (Incorrect Application))1

$119,465

Base Year (Insurance (Understatment))1

$490,347

Calculation Method (Incorrect Allocation)1

$81,555

Base Year (Management Fee (Understatment))1

$561,258

13.53%

8.25%

33.85%

5.63%

38.74%

(1) The outlined audit savings does not reflect the amounts related to subsequent periods based on audit corrections to systemic accounting policies. If such savings were also included within the representation for this Case Study Synopsis™, the audit savings would be $7,387,870.


Washington District of Columbia

This audit covered the review of the books and records of three (3) ownership entities and two (2) property management organizations.

Our team’s audit revealed that the significant errors were made in a wide variety of operating expense and cost categories including, but not limited to, security, insurance, electricity and repairs & maintenance. Following a review of the building records and interviews with the building asset manager it was determined that the landlord was using inconsistent methods in accounting for costs incurred in the operation of the building. Although not supported by the lease or the applicable amendments, the landlord was independently switching between cash and accrual accounting during each of the periods under audit review. Our team remodeled the annual cost records and removed all expenses that had been double booked, translating into substantial savings for each year under review.

It was also noted the overtime HVAC reimbursement credits were being calculated incorrectly. It was determined that the landlord was varying the hourly rates and the framework and methodology for how credits were to be quantified and allocated to the operating costs of the building. The discrepancies between methods used in the base years and those outside the base years amounted to the landlord collecting considerably more than was actually being incurred for this category. Following the audit, our team supported that expense categories and subcategories for each of the two (2) base years had been drastically understated due to the landlord “holding” certain expenses until the base year periods had elapsed. These practices were noted, supported and adjusted allowing each of the individual base years to be reset to normalized and accurate levels the impact of which would generate additional material savings through the remainder of the lease term.

Industry Type

Legal

Case Study Synopsis™ (866)Washington, District of Columbia, United States


Audit Summary

Audit Savings


$915,860

$4.80


Consortium


National Corporation

Self-Managed No


Q4 2002

Representation Type


Campaign Scope Global Portfolio

Audit Cycles Annua/Recurring




Case Study Synopsis™ (866) Washington, District of Columbia, United States

Case Study Synopsis™ (866)Washington, District of Columbia, United States


Insurance (Overstatement (Accrual))

$119,582

13.06%

Repair and Maintenance (Overstatement (Accrual))

$312,246 Security (Accounting (Inconsistency))

$276,492

34.09% 30.19%

Electricity (Reimbursement (No Application)1 $207,540

22.66%



Toronto Canada

Upon the commencement of the audit, our team found that the landlord was renovating a block of space that had recently been vacated by a major user in order to ready it to be marketed to the public. The landlord had also replaced three (3) of the building HVAC units and passed the entire expense through in one (1) operating year, rather than amortizing the charges over the useful life of the improvements. This proved to be a pivotal adjustment as our client was moving out of the building in less than two (2) years and would avoid the balance of the amortization liability. We also found the landlord was including imputed rents and all utility charges associated with the management, janitorial and security offices located in the building even though such charges were not allowable per the lease, and were not present within the base year. We discovered and adjusted various expenses of landlord’s general corporate overhead not wholly attributable to the operation and management of the building.

Industry Type

Banking

Case Study Synopsis™ (936)Toronto, Canada


Audit Summary

Audit Savings


$1,259,107

$5.76

Landlord TypeInvestment Trust


Investment TrustSelf-Managed

Yes


Q1 1999

Representation Type










Pro-Rata Share (Calculation Method (Inconsistency))

$157,636

Repair and Maintenance (Buildout (Another Tenant))

$407,622

Capital Expenditures (Amortization)

$506,341

12.52%

32.37%

40.22%

Corporate Overhead (Exclusion Compliance) $187,508

14.89%


Chicago Illinois

Our team performed an audit of a property that had been converted to office use and retrofitted as an occupancy inducement. However, during the audit, it was determined that much of the work that was to be completed regarding the HVAC system modification was not finished in advance of the client’s lease commencement, but rather postponed and passed through to the client as part of the operating expenses of the building. Additionally, the landlord was categorizing subsequent replacements of major HVAC components as expenses with the justification that the incurred “cost savings expenditures” would increase the operating efficiency and ultimately decrease the overall operating costs of the building. The cost savings calculations provided by the landlord were reviewed and scrutinized and it was determined that the only reason the theoretical cost savings delta existed was because the correct work was not completed initially and thus the system was operating below required standards. Our position was further supported by a synopsis report from the global vendor responsible for the initial and additional work which confirmed the audit positions.

We also detailed that the landlord calculated the management fee incorrectly by including non-qualifying revenue related to termination fees, HVAC reimbursements, fitness center charges and cafeteria rent. These alternate revenue streams were noted and removed from the calculation methodology. Further, adjustments were made related to the inclusion of sale related bonuses and applicable taxes which coincided with the change of ownership of the building. Through the audit, our team also removed corporate legal and professional fees as well as miscellaneous items such as improper accrual charges for water and HVAC reimbursements due to the change in ownership. Such final accruals were accounted for in the general ledger of the prior ownership, but were not reversed in the general ledger of the new ownership when the actual costs for the accrual periods were recorded.

Lastly, our team reversed duplicate charges related to the actual costs of providing the overtime HVAC services (engineer labor, electricity and additional repairs due to wear and tear) which had already been included in the operating expenses for the building.

Industry Type

Banking

Case Study Synopsis™ (10218) Chicago, Illinois, United States


Audit Summary

Audit Savings


$3,658,441

$9.40


Corporation



Self-Managed No


Q3 2004

Representation Type



Portfolio





Case Study Synopsis™ (10218)Chicago, Illinois, United States

Case Study Synopsis™ (10218)Chicago, Illinois, United States


HVAC Installation (Exclustion Compliance)

$482,348

Professional Fees (Exclusion Compliance)

$175,688

HVAC (Duplicate Charge(s))

$147,612

HVAC Installation (Capital Expenditure (Removal))

$902,399

Payroll (Exclusion Compliance)

$89,643

HVAC (Overstatement (Accrual))

$127,197

Repair and Maintenance (Other (Exclusion Compliance)

$730,699

Management Fee (Overstatement (Actual Cost))

$861,053

Water (Overstatement (Accrual))

$141,802

13.18%

4.80%

4.03%

24.67%

2.45%

3.48%

19.97%

23.54%

3.88%


Beijing China

RRG’s audit covered three (3) operating years.

Following RRG’s review of audit information provided, it was noted that there were three (3) abatement periods granted under the terms of the lease. The periods correlated to the first calendar year quarter in each of the first three (3) years of the lease term. Within such defined abatement periods, all base rent payments were to be relieved. It was confirmed that the client was billed, and paid full, base rent for the initial thirty-six (36) months of the term. Following correspondence with the property manager and presentation of the findings, it was agreed that a credit would be generated for the client (corresponding to nine (9) months of base rent) to apply to the upcoming months of base rent until exhausted.

RRG also adjusted club membership dues and the cost to acquire the artwork and sculptures that were decorating the lobby of the building which were being passed through.

Industry Type

Financial Services

Case Study Synopsis™ (7224)Beijing, China


Audit Summary

Audit Savings


$289,478

$4.28

Landlord TypeInternational Corporation



Self-Managed No


Q3 2005

Representation Type










Rent Abatement (No Application)

$157,815

Rent Abatement (Incorrect Application)

$76,218

Dues/Subscriptions (Exclusion Compliance)

$25,834

54.52%

26.33%

8.92%

Artwork (Exclusion Compliance) $29,611

10.23%


Los Angeles California

Our team’s audit covered four (4) operating years and three (3) changes in ownership.

RRG was initially engaged to determine the validity of a minimal operating expense “carry over” charge from a prior landlord’s cost records. During the initial field-work visit, our team discovered that the charge was indeed erroneous because the base year tax amount was excluded from the overall base year cost determination. Our team negotiated with the landlord to secure the adjustment. The new corrected base year was confirmed and the landlord agreed to utilize the increased base year for the remainder of the lease term. Following an additional detailed review of the operating expense data, general ledgers, invoices, work-orders and tax bills, our team documented that the Proposition 13 clause stipulated in the lease was not adhered to following two (2) changes in ownership. We also noticed that the client had been and was currently being charged improperly for costs associated with after-hour HVAC usage. Our team worked with utility suppliers to verify usage numbers and rate costs. Due to the magnitude of the audit findings, the landlord suggested engaging a third party engineer who had worked on the building systems in the past. All parties agreed to the study by the engineer who subsequently verified and concurred with all of our team’s findings. The landlord agreed to apply all adjustments in accordance with the audit results for each remaining year of the lease term.

Industry Type

Entertainment

Case Study Synopsis™ (9237)Los Angeles, California, United States


Audit Summary

Audit Savings


$2,735,861

$14.48


Corporation



Self-Managed No


Q3 2005

Representation Type


Campaign Scope United States

Portfolio





Case Study Synopsis™ (9237) Los Angeles, California, United States

Case Study Synopsis™ (9237)Los Angeles, California, United States


Base Year (Real Estate Tax (No Application))1 $993,419

Electricity (Overstatement (Actual Cost))

$1,011,852

Real Estate Tax (Proposition 13 Application)1

$528,306

Chilled Water (Overstatement (Actual Cost))

$74,418

Electricity (Reimbursement Method (Incorrect Application))1

$127,866

36.31%

36.98%

19.31%

2.72%

4.67%



Sydney Australia

RRG’s audit covered two (2) years and three (3) changes in ownership.

Upon RRG’s review of the lease, file information, including historical incentive agreements, and other materials related to this location, it was determined that incentive payments had not been paid to the client and remained outstanding. Due to multiple changes of ownership, the documentation supporting the amount owed could not be readily determined and supported by the current landlord. RRG wound up requesting and reviewing all of the information contained in the due diligence files covering the prior two (2) ownership changes and modeled the appropriate outstanding incentive framework based on such complete materials. Upon review of those files, it was confirmed that only an immaterial amount equating to less than five percent (5.00%) had been paid to the client four (4) years earlier while the balance remained unpaid. RRG worked with the current landlord to facilitate the issuance of the balance to the client in order to resolve all incentive concerns.

Industry Type

Financial Services

Case Study Synopsis™ (7841)Sydney, Australia


Audit Summary

Audit Savings


$1,529,477

$36.68

Landlord TypeInternational Corporation

Property Manager TypeInternational Corporation

Self-Managed Yes


Q3 2007

Representation Type










Rent Abatement (No Aplication)

$420,497

Buildout Allowance (Request (Incorrect Payment))

$1,108,980

27.49%

72.51%


Boston Massachusetts

RRG’s audit covered one (1) operating year as RRG had audited all of the other years in prior audits.

Upon the commencement of the audit, RRG found that the landlord had charged back to operating expenses the entire audit refund secured by RRG for the client from the prior year audit and passed it through to the building of which the client occupied ninety-three percent (93.00%). Additionally, following the review of the preliminary and secondary materials requested during the audit, RRG noted that the management fee charged exceeded the amount allowable as such fees were fixed at a static monthly amount for the duration of the lease. During this operating year, the landlord was also calculating the management fee at the project level using a five percent (5.00%) of gross revenue model and then allocating the fee on a building share basis which was not allowable given the fixed nature of the client’s lease provision. The landlord agreed to adopt the corrected management fee methodology and apply it through the remainder of the lease term. All such charges were adjusted for the subject operating year. In addition, RRG was able to revise the operating expense basis used to determine the estimates being paid in the current year resulting in an additional savings related to the management fee adjustment.

Industry Type

Computer

Case Study Synopsis™ (862)Boston, Massachusetts, United States


Audit Summary

Audit Savings


$489,796

$4.13

Landlord TypeNational

Corporation

Property Manager TypeFortune 500 Corporation

Self-Managed No


Q2 2003

Representation Type



Portfolio








Pro Rata Share (Management Fees (Incorrect Application))

$200,506

Management Fees(Contract Compliance)

$225,976

Audit Refund(Duplicate Charge(s))

$63,314

40.94% 46.14%

12.93%


Miami Florida

Our team’s audit covered multiple years, three (3) property manager changes, two (2) ownership changes and two (2) subleases.

After coordination with multiple entities, we were able to compile the complete set of financial history. Our team analyzed all financial records associated with the operation of the building and noted various accounting inconsistencies. The trend model prepared identified a substantial increase in expense liability subsequent to each change in property manager. It was shown that each new entity was double, and in some cases triple, billing the client. The errors were across numerous categories and sub-categories and were generally a sign of an overall mismanagement rather than the localized mistreatment of certain expenses. We noted the sources of the errors, rebuilt the accounting history and worked with each ownership group to secure refunds for all overcharged amounts.

Our team also analyzed the two (2) existing subleases associated with the location. Following a detailed audit of the original documents, applicable amendments and financial history at the location, our team determined that the client had been improperly billing its subtenants. Under one (1) sublease, the client’s outsourced lease administration firm had failed to escalate rent in accordance with the sublease for over four (4) years. Furthermore, while the landlord was sending the lease administration firm the electricity bills tied to the subtenant’s after-hours utility use, they were never being charged back to the subtenant for reimbursement. Under the second sublease the same lease administration firm failed to calculate and seek reimbursement for any additional rent charges as provided for in the sublease. The subtenant had a clearly defined base year, however no additional rent had been charged for five (5) years each of which was above the base year. Our team reconciled each respective sublease history, supported the back billing, applied any “carry over” credits from the landlord audits and collected the substantial reimbursements from the subtenants. Our team also developed a program and implemented financial models to be utilized for tracking and accurately calculating the reimbursements in the future.

Industry Type

Banking

Case Study Synopsis™ (811)Miami, Florida, United States


Audit Summary

Audit Savings


$718,559

$7.66


Consortium



Self-Managed Yes


Q4 2001

Representation Type



Portfolio








Duplicate Charge(s) $75,208

Sublease (Calculation Method (Rent Escalation Basis))

$86,012

Accounting Method (Charges) $96,261

Calculation Method (Non-Reconciliation)

$144,523

Calculation Method (No Allocation)

$316,555

10.47%

11.97%

13.40%

20.11%

44.05%


Irving Texas

Through the audit, we noted that the landlord used operating expense and tax amounts that did not contain a gross-up factor when determining the base year costs for this build-to-suit property. Furthermore tax amounts used as the base year tax expense excluded the building value and were solely attributable to the land value. Our team interviewed and worked with the lead tax assessor in the state to determine the proper base year tax assessment for the project. We reviewed all records associated with the operation and the construction of the building, remodeled the costs and reset the base year expenses. The client exercised its termination right during the negotiation of the audit and was asked to pay the termination fee. Our team analyzed the multiple metrics making up the termination fee and concluded that adjustments were warranted due to the impact of the previously adjusted expenses and tax concerns. Additionally, we determined that the amortization schedule and methodology used by the landlord were inconsistent with the lease provisions and adjustments were made.

Industry Type

Telecommunications

Case Study Synopsis™ (10882)Irving, Texas, United States


Savings Segmentation by Micro-Savings Type™Audit Summary

Audit Savings


$1,986,129

$12.34


Corporation



Self-Managed Yes


Q2 2006

Representation Type







Base Year (Gross-Up Method (No Application))

$368,365

Real Estate Tax (Assessed Value)

$715,018

Base Year (Understatment)

$312,522

18.55%

36.00%

15.74%

Termination Fee (Calculation Method (General Compliance))

$590,224

29.72%




Montreal Canada

RRG’s audit commenced as a two (2) year review, but based on a “claw back provision” within the lease evolved into a five (5) year review covering two (2) ownership entities and two (2) property management organizations.

Initially, it was noted during the audit that the landlord’s gross-up calculation did not reflect the appropriate variable-fixed ratio for the water consumption expense and that a material number of capital expenditures were being classified as operating expenses. These elements were addressed and adjusted and corrected during the early phases of RRG’s audit. The landlord was also collecting a management fee equal to four percent (4.00%) of gross revenue. Following the review of the management fee agreement, the outlined framework dictated that only two percent (2.00%) of that was being dispersed to the management company while the balance was being retained by the landlord. The lease was very specific and restricted the management fee expense to be incurred by the client to that actually paid to the third party management company. This was agreed to and reduced by the landlord. Further, the model resulting from the audit, which equated to a reduction in the management fee percentage by half, was adopted by the landlord for the remainder of the lease term.

RRG also made numerous adjustments to the insurance categories. The landlord was passing through premium amounts that were in excess of those actually incurred. In addition, garage keepers insurance was removed and all periods with overlapping coverage were corrected. The landlord was also charging back to the building as operating expenses tenant-related costs such as meals, gifts, and similar charges which were all confirmed as leasing related expenses.

Industry Type

Financial Services

Case Study Synopsis™ (18544)Montreal, Canada


Audit Summary

Audit Savings


$1,757,168

$18.00


Corporation



Self-Managed Yes


Q4 2007

Representation Type



Portfolio








Water (Gross-Up Method (Incorrect Application))1

$164,873

Tenant Events (Exclusion Compliance)

$9,425

Management Fees (Contract Compliance)

$412,833


$1,084,001

Parking (Insurance (Accounting Method Charges))

$13,878

Building Insurance (Overstatement (Actual Cost))

$72,158

9.38%

0.54%

23.49%

61.69%

0.79%

4.11%



Philadelphia Pennsylvania

Our team’s audit covered multiple years and two (2) changes in ownership.

At the outset of the audit, it became apparent that the correct pro-rata share was not being used. Our client had expanded within the building through multiple amendments each of which modified its share of the building. What the landlord failed to consider was that in many of these amendments, not only was additional space being occupied, but other spaces within the building were being terminated. The landlord was not reflecting the terminated spaces in the calculations and continued to increase the share without netting out the shares associated with the vacated spaces. It was also noted that there were numerous issues associated with taxes. A practice was developed whereby the taxes were being paid ahead of the payment schedule to take advantage of the early payment discount that was offered by the City of Philadelphia. However, this discount was not being passed on to the tenants of the building. It was also determined that the landlord was including the costs of business taxes from other owned entities in the operating costs of the building.

Furthermore, the landlord was not only passing through auditing, accounting and professional fees in connection with audits of the financial statements of other buildings within its portfolio, but also the fees associated with the preparation of the federal and state income tax returns for the respective partnerships. Our team also removed numerous sponsorships, club memberships, sports tickets and contributions that were paid by the landlord each year, but then accounted for as liabilities of the building. Lastly, it was also determined that every expense associated with the operation and maintenance of the parking garage was being passed through as an expense to the building although clearly excluded per the terms and conditions of the lease.

Industry Type

Health Care

Case Study Synopsis™ (7682)Philadelphia, Pennsylvania, United States


Audit Summary

Audit Savings


$1,448,602

$7.81

Landlord TypeEntrepreneurial

Property Manager TypeEntrepreneurial

Self-Managed Yes


Q1 2003

Representation Type



Portfolio








Real Estate Taxes (Rebate)

$131,319

Accounting Method (Pro-Rata)

$970,291

Accounting Fees (Exclusion Compliance)

$182,617

7.11%

52.56%

9.89%

Parking/Garage (Exclusion Compliance) $561,677

30.44%


Seattle Washington

RRG’s audit encompassed four (4) years.

Following a detailed review of landlord’s books and records, RRG noted that the landlord had included the cost of certain capital expenditures which, per the lease, were to be excluded from operating expenses. Initially, the landlord disagreed with RRG’s position, but following negotiations which included the landlord, client and each party’s respective legal representatives, RRG achieved a settlement whereby the landlord would exclude sixty percent (60.00%) of the amortized costs of the disputed capital expenditures from operating expenses (“60.00% Capital Model”). In addition, the landlord and the client, via the settlement agreement, specified the future projects which fit the 60.00% Capital Model and agreed that such future projects would be amortized and subjected to the same exclusion model. This agreement by the landlord with the audit results would produce additional annual savings through the remainder of the lease term.

Industry Type

Technology

Case Study Synopsis™ (15139)Seattle, Washington, United States


Audit Summary

Audit Savings


$2,988,127

$21.24




Self-Managed No


Q3 2005

Representation Type



Audit Cycles Annua/Recurring







Capital Expenditures (Removal)1

$1,905,875

Capital Expenditures (Amortization)1

$1,082,252

63.78%

36.22%



New York New York

Our team determined through the course of the audit that the landlord was charging through all costs associated with Americans with Disabilities Act (“ADA”) compliance even though the lease directly excluded costs of alterations and improvements made to cure violations of laws and requirements of public authorities where violations existed prior to the commencement date. It was also noted that the management fee calculation structure being implemented was flawed.

The annual increase in the management fee was supposed to be determined by applying the percentage increase in the Consumer Price Index for All Urban Consumers (“CPI-U”) from the same period the previous year. However, the landlord was calculating the annual index difference and using that static number as the percentage rather than calculating the percentage increase accurately. This error was artificially accelerating the increase rate for the management fee expense category. The audit also revealed that the landlord was including in building expenses all costs associated with corporate overhead including, but not limited to promotional fees, charitable contributions, meals and entertainment. Furthermore, the landlord was involved with the redevelopment of a public park project (not related to building) and was categorizing all design, architectural and planning fees as operating costs of the subject building.

Industry Type

Financial Services




Audit Savings


$2,052,642

$6.13




Self-Managed No


Q1 1998

Representation Type



Portfolio


Audit Accuracy™ 80.29%%



Repair and Maintenance (Code (ADA))

$1,139,482

Management Fees (Calculation Method (Inconsistency))

$472,964

Professional Fees (Accounting Method (Pro-Rata))

$77,649

55.51%

23.04%

3.78%

Corporate Overhead (Exclusion Compliance)

$362,547

17.66%




Denver Colorado

RRG’s audit covered four (4) operating years and an ownership entity who had failed to reconcile the building costs for two (2) years.

Following the fieldwork visit and interviews with the property manager and asset manager, it was determined that the landlord was passing through all costs associated with its corporate operation. RRG supported that the landlord had improperly included various administrative expenses such as corporate travel for executives, leasing expenses and tenant parties in the operating expenses for the building. Furthermore, RRG’s review of the general ledgers and invoice support confirmed that the client was not credited the entire amount of operating expense and real estate tax estimates it had paid for the most recent two (2) year period. The landlord had not applied the last four (4) months from the prior year and the first four (4) months from the current year even though the general ledgers reflected the payments were made and classified correctly. It was confirmed and agreed by the landlord that the estimates payments had not transitioned to and were not reflected accurately on the reconciliation statements that were generated and issued.

Following the completion of discussions with the tax assessor and other taxing authority representatives, RRG was able to confirm the date the tax refunds were released to the landlord. The dates provided did not correlate to any of the documentation reviewed over the course of the audit. During the negotiation the landlord confirmed that they had indeed received the tax refunds during the periods outlined by the taxing authority, but had failed to apply the appropriate credits to the subject building. Additionally, the lease also limited any tax consulting fees paid by the landlord by applying a cap to such costs. The audit confirmed that no cap had ever been applied to these charges which were adjusted through the audit as well.

Industry Type

Energy

Case Study Synopsis™ (11479)Denver, Colorado, United States


Audit Summary

Audit Savings


$1,774,385

$10.93


Corporation


IndividualSelf-Managed

No


Q4 2008

Representation Type










Tax Consulting Fees (Cap (No Application)) $319,454

Accounting Method (Estimate Payments) $405,989

Corporate Overhead (Exclusion Compli-

ance) $48,167

Real Estate Tax (Refund) $962,930

Tenant Events (Exclusion Compliance)

$37,845

18.00%

22.88%

2.71%

54.27%

2.13%


Bangalore India

RRG’s audit covered three (3) operating years.

It was noted during initial stages of the review that the business park, in which the client’s buildings were located, had been accorded a status to operate as a Special Economic Zone (“SEZ”). Under the SEZ Act of 2005 and rules of 2006, and service tax regulations, qualified SEZ developers received numerous incentives, including service tax exemptions. Following a review of information provided during the audit, it was confirmed that service taxes, contrary to the requirements of the act, had been included in the charges to and payments made by the client. We worked with all parties to model the correct payment amounts based on the appropriate expense obligations. The landlord noted they were unaware this was occurring and agreed to immediately post the credits in accordance with the audit to be offset against the client’s upcoming rents due.

Industry Type

Telecommunications

Case Study Synopsis™ (5169)Bangalore, India


Audit Summary

Audit Savings


$470,536

$3.70




Self-Managed No


Q2 2000

Representation Type


Campaign Scope Global

Portfolio








Real Estate Tax (Zoning Compliance)

$137,898

Real Estate Tax (Exclusion Compliance)

$86,416

Real Estate Tax (Offset Method (No Application)

$246,222

29.31% 18.37%

52.33%


Nashville Tennessee

RRG’s audit encompassed four (4) years and two (2) ownership entities.

Following the review of the base year expenses provided by the current landlord, RRG noted that the methodology used in establishing the base year was not in compliance with the lease. The current landlord had provided a “re-stated” base year that had been constructed following the purchase of the building which misstated the actual value of numerous base year operating components. Additionally, the current landlord had attempted to change the proper base year “gross-up” calculations and apply a methodology that used incorrect occupancy statistics thus understating all accounts where a “gross-up” applied. RRG corrected the “re-stated” base year to properly reflect the actual figures as previously established by the previous ownership and then performed the appropriate “gross-up” calculations utilizing the correct occupancy rates for the base year. Each of these audit corrections would be applied across the remaining accounting periods within the term.

Following RRG’s cap analysis, it was confirmed that the landlord had not appropriately applied the cap on controllable expenses as outlined in the lease. The designation of “controllable” and “non-controllable” expenses utilized by the landlord was incorrect, and as such, the protection provided by the cap was understated. RRG modeled the cap in accordance with the lease and applied it properly resulting in a further reduction in client liability. RRG also confirmed during the audit that the landlord had been passing through marketing expenses related not only to the subject building, but also five (5) other buildings that it owned.

Industry Type

Telecommunications

Case Study Synopsis™ (6004) Nashville, Tennessee, United States


Audit Summary

Audit Savings


$1,670,952

$6.86


Corporation


Local Corporation

Self-Managed No


Q4 2007

Representation Type



Portfolio





Case Study Synopsis™ (6004)Nashville, Tennessee, United States

Case Study Synopsis™ (6004)Nashville, Tennessee, United States


Base Year (Understatment)1

$647,250 Base Year (Gross-Up Method (Incorrect Application))

$418,221

38.74% 25.03%

Marketing Fees (Exclusion Compliance)

$107,156

6.41%

Cap (Incorrect Application)1

$498,325

29.82%



Madrid Spain

RRG’s audit covered seven (7) years and two (2) ownership entities.

Upon commencing the audit, RRG was informed that the audit would not be allowed as the client had already performed an audit internally and no adjustments were made. RRG was aware the client had an internal desktop review program in place for most of the decade long period it had been representing them and upon review of the file history and consultation with the client, RRG did not see any reason as to why a formal audit would not be permitted. RRG was able to work with the landlord and outline why it should be provided access to perform the review and the audit should be allowed to advance. Ultimately, the landlord, citing its professional, global history with RRG, concurred with the performance of the formal audit.

Following RRG’s review of the lease and other supporting documents associated with the operating expenses for the building, it was noted that several expenses, including insurance and certain capital expenditures which appeared excludable were actually included. In addition, RRG confirmed that a cap limitation on all operating expenses had not been applied. RRG requested an adjustment of the relevant items, including an application of the cap. Each of the adjustments was applied and the new cap method was agreed to by the landlord. Further, an amendment was drafted to ensure the correct application of the cap during each subsequent accounting period throughout the remainder of the lease term.

Upon submission of the audit report, the landlord initially disagreed with the interpretation of the cap and the basis for the cap. In addition, the landlord also challenged the right to audit all of the years included in the report and attempted to limit the scope citing case law related to statute of limitations. RRG’s audit team provided counter positions and was able to develop a case for the inclusion of all the operating years to which the landlord ultimately agreed. Following audit discussions with the landlord, and in consultation with client, RRG secured a settlement of the full amount requested in the initial audit report.

Industry Type

Technology

Case Study Synopsis™ (4993)Madrid, Spain


Audit Summary

Audit Savings


$2,949,090

$11.33


Corporation



Self-Managed No


Q1 2005

Representation Type



Portfolio









$819,588 Capital Expenditures (Amortization)

$383,343

27.79% 13.00%

Terrorism Insurance (Accounting (Pro-Rata))

$684,215

23.20%

Cap (All Expenses (Cummulative))1 $1,061,874

36.01%



Houston Texas

Our team’s audit review was conducted across multiple operating years and was based on the various, legacy lease agreements with staggered commencement dates.

There were several buildings included in the audit along with a hotel property and numerous garage properties. The audit identified a number of major accounting issues that directly impacted the economics of the project and the resulting savings. We found that the cost allocation methodology being used by the landlord to assign expenses to different properties within project was incorrect. The team reallocated the costs of shared services accurately across the applicable properties and the ownership structures. We also noted and adjusted several expenses that qualified (for various reasons) as capital expenditures according to Generally Accepted Accounting Principles (“GAAP”), but were being booked as building expenses. Further, the landlord was misinterpreting and thus misapplying the cap framework defined in the leases. After analyzing the data, our team derived the proper “cap” application method taking into consideration the appropriate periods and expense categories covered. The proper application of the “cap” resulted in a drastic decrease in the expense exposure not only in the subject years, but also throughout the lease term.

Industry Type

Energy

Case Study Synopsis™ (14523)Houston, Texas, United States


Audit Summary

Audit Savings


$2,658,962

$5.87



Investment TrustSelf-Managed

Yes


Q3 2004

Representation Type







Case Study Synopsis™ (14523)Houston, Texas, United States

Case Study Synopsis™ (14523) Houston, Texas, United States



$990,816

Cap (Calculation Method (General Compliance))1

$587,910

Calculation Method (Incorrect Allocation)1

$1,080,236

37.26% 22.11%

40.63%



Atlanta Georgia

RRG’s audit covered four (4) years and two (2) property management organizations.

Upon review of the information initially obtained, it was noted that utilities were far in excess of what was expected for a building of this size, class and age within the subject region based on RRG’s internal benchmarks and utility standards. Following the performance of the fieldwork, it was confirmed that the ownership had improperly booked the common area utility costs into two (2) separate expense pools which resulted in a duplication of utility expenses passed through to the client. RRG modeled the proper expense pools and worked with the landlord in order to accurately revise the reconciliation statements that had been prepared, released and paid by the client.

An issue was also noted with the management fee being charged. The lease had called for a “step-down” model whereby the property management fee remained static at five percent (5.00%) for lease years one (1) through three (3) and then decreased to three percent (3.00%) for the remainder of the lease. The landlord had failed to reduce the management fee percentage and had been passing through the expense modeled using the higher rate for the four (4) years under review. It was agreed as a condition of the audit resolution that the landlord would only apply the reduced management fee percentage for the remainder of the lease.

Industry Type

Banking

Case Study Synopsis™ (8157)Atlanta, Georgia, United States


Audit Summary

Audit Savings


$982,667

$12.83


Corporation



Self-Managed Yes


Q2 2005

Representation Type

Non-Exclusive Service Provider


Portfolio








Electricity (Accounting Method (Charges))

$446,906

Water (Accounting Method (Charges))

$20,678

Gas (Accounting Method (Charges))

$61,964

Management Fees (Contract Compliance)1

$434,662

Steam (Accounting Method (Charges))

$18,457

45.48%

2.10%

6.31%

44.23%

1.88%



Carmel Indiana

Upon the commencement of the audit, RRG determined that an allowance granted through the lease had not been applied appropriately by the landlord. The clause had a provision whereby any unused amount converted to base rent credit available immediately up to a capped amount which was to be applied proactively by the landlord. The trigger date on this concession was three (3) years prior. Any balance above the cap amount was to be applied using a pre-set model to reduce the monthly base rent on a pro-rata basis through the remaining term of the lease. The landlord initially noted that the cost of building out the space far exceeded the allowance that was provided and that it would be generating a final invoice for submission to the client. RRG performed an audit of the entire construction project including all contracts, construction documents, AIA documents, drawings, project invoices and relevant supporting documentation. RRG matched all subcontractors’ cost schedules against the American Institute of Architects (“AIA”) documents and cross referenced the landlord’s payment records against the actual invoiced amounts. RRG verified that there wasn’t an overage, but rather a material surplus available. Subsequently, we modeled the amounts, ensured the proper application of the initial, immediate credit and provided an accurate base rent reduction schedule to resolve the open matter.

RRG also removed through the audit a roof replacement project that had been classified as a routine, recurring expense instead of a capital expenditure. It was further noted by the landlord that it has attempted this classification as the lease only allowed capital expenditures that decreased the operating cost of the building and then only up to the quantifiable savings amount.

Industry Type

Government

Case Study Synopsis™ (12416)Carmel, Indiana, United States



Audit Savings


$495,272

$27.11

Landlord TypeLocal Corporation

Property Manager TypeEntrepreneurial

Self-Managed No


Q3 2009

Representation Type


Campaign Scope State Portfolio





Buildout Allowance (Cost Determination)

$274,034


$221,238

55.33%

44.67%




Newport NewsVirginia

RRG’s audit covered five (5) operating years and two (2) property management organizations.

Upon review of the initial set of audit information, RRG noted that landlord was charging the client an arbitrary, square footage-based rate for utilities rather than actual costs incurred. The landlord’s interpretation of the lease was that electricity could not be included in operating expenses and must be billed to the client separately. However, this only applied in the event the landlord had installed a metering device. Following RRG’s fieldwork and survey of the building, there were no metering devices installed to monitor the utility usage. RRG corrected all utility billings based on actual costs incurred and modeled the appropriate calculations based on building level usage.

The lease also required that if the building was not one hundred percent (100.00%) occupied during any calendar year, including the base year, then the variable cost components should have been equitably adjusted to amounts which would have been paid had the building been at full occupancy. It was confirmed through the audit that this had not occurred even though the building had not achieved full occupancy during the base year. Upon further correspondence with the landlord, it was agreed that base year would be appropriately adjusted to reflect the proper category amounts and each subsequent year liability would be reduced following the application of the corrected base year thus generating a material savings across all operating years audited, throughout the remainder of the lease and any extension term.

It was also confirmed through the audit that the management fees passed through to the client were in excess of the actual management fee incurred. RRG not only reduced the management fee rate from three percent (3.00%) to one percent (1.00%), but also was able to remove garage operating income received from the management fee model.

Industry Type

Aerospace


Case Study Synopsis™ (21133)Newport News, Virginia, United States


Audit Summary

Audit Savings


$2,140,567

$19.69




Self-Managed No


Q1 2004

Representation Type



Portfolio








Base Year (Understatement)1

$788,055Electricity (Overstatement (Actual Cost))

$425,791

36.82% 19.89%

Base Year (Gross-Up Method (No Application))1

$301,865

14.10%

Management Fee (Contract Compliance)1

$624,856

29.19%



Minneapolis Minnesota

RRG audit covered eight (8) operating years.

The location was a pad site banking center within a retail power center project. The client was only responsible for its share of a limited pool of shopping center operating costs. RRG determined through the course of the audit that while the lease prescribed share was fifteen percent (15.00%), the landlord had been consistently using an arbitrary forty-four percent (44.00%). It was determined that the landlord adopted the share utilized by the previous landlord following its purchase of the project nine (9) years prior. Further, the limited pool expense basis had been greatly broadened by the landlord in determining the cost pass through charges to the client. While the real estate taxes attributable to the pad site were directly billed to and paid by the client, the landlord was also including a tax component associated with the remainder of the project in the client’s liability. The landlord not only agreed to adjust the pro-rata share and expense pool determination for all subject years, but also the real estate tax pass through methodology that had been implemented since the commencement of the lease thus producing additional savings through the lease term.

Industry Type

Banking

Case Study Synopsis™ (9751)Minneapolis, Minnesota, United States


Audit Summary

Audit Savings


$408,783

$64.76


Corporation



Self-Managed Yes


Q2 2009

Representation Type



Portfolio





Case Study Synopsis™ (9751) Minneapolis, Minnesota, United States

Case Study Synopsis™ (9751)Minneapolis, Minnesota, United States


Real Estate Tax (Zoning Compliance)

$98,230

Calculation Method (No Allocation) 1 $93,331

Pro-Rata Share (Incorrect Application (Legacy))1

$217,222

24.03% 22.83%

53.14%



Dallas Texas

RRG’s audit covered five (5) operating years.

RRG initially adjusted all charges related to an asbestos removal project that had taken place over a two (2) year period which had been classified as repair and maintenance costs within the general ledgers. Following the breakdown of the management fee expenses, it was also determined that the landlord had been including various ancillary revenue streams in the gross income calculations. RRG identified and removed non-qualifying income related to antenna rent, parking revenue and ground rent in order to adjust the management fee to the appropriate level required by the lease.

The audit also confirmed that the landlord was passing through the amortization expenses for elevator upgrades, cooling tower replacement, access system installation, garage lighting retrofit and security system upgrade although the lease excluded all costs associated with capital repairs, replacements and/or improvements. As for insurance, following consultation with the property insurer, RRG detailed that there was a discrepancy in the total property insurance charged as well as the allocation between prepaid insurance and insurance expense. Both accounts were reconciled in accordance with the invoice amounts paid and actual periods covered by the policies.

It was also determined that the landlord had initiated a process of applying a gross-up model to administrative salaries four (4) years prior. This method was reversed by RRG as such salaries were not costs that varied with occupancy and each associated year was adjusted. The adoption by the landlord of all the audit adjustments ensured material cost savings throughout the remainder of the lease term and any subsequent renewal term.

Industry Type

Energy

Case Study Synopsis™ (12118)Dallas, Texas, United States



Audit Savings


$3,985,411

$16.21

Landlord TypePrivate Equity

Fund



Self-Managed No


Q4 2003

Representation Type



Portfolio





Repair and Maintenance(Asbestos Removal)

$661,856

Management Fees (Non-Qualifying Revenue)1

$784,513

Capital Expenditures (Removal)1

$1,711,879

Administrative Salaries (Gross-Up (Incorrect Application))1

$347,839

Building Insurance (Overstatement (Actual))

$479,324

16.61%

19.68%

42.95%

8.73%

12.03%






RRG was founded to transform the way the world’s greatest organizations capture, process, understand and evaluate the post transactional costs associated with their real estate portfolios.


We unlock portfolios through a calibrated combination of proprietary processes and technology. Our unrivaled experience includes access to valuable scenarios, trends, strategies, data, analytics, tech-niques and outcomes that enable us to craft compelling, dynamic solutions ensuring success is achieved regardless of requirement complexity and intricacy.

RRG constantly invests in the creation of the most “forward thinking,” effective solutions placing a substantial premium on innovation in order to best serve the sophisticated and complex needs of our diverse client base.


Our vision is to empower organizations through insight, knowledge and data to revolutionize real estate compliance and governance.

Specialization has driven our ability to continually calibrate our solutions to address the unique objectives of our diverse private and public sector client base.

We continue to believe in the marriage of data, cost control and compliance as the gateway to portfolio optimization.



Sound strategies power the most successful organizations in the world. When it comes to cost control, what’s your strategy?























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