Whether you’re a startup or a fast-growing company, it’s important to integrate technologies into business processes, especially as real estate continues to undergo digital transformation.
Today, Lauren Bahr talks about how they are bringing teams together online to collaborate on the entire lease life cycle. She is the Vice President of Finance at Occupier, a solutions provider for real estate and accounting teams to seamlessly manage leases and maintain compliance. Lauren also breaks down the New Lease Standards and offers valuable advice to navigate the changes in the industry.
[00:01] – [09:58] The Future of Lease Management
- Lauren talks about her background and how she came to work for Occupier
- Occupier makes lease management easier and helps finance teams be compliant
- How brokers can benefit from using Occupier
- Their biggest differentiators: user experience and being a one-stop-shop for collaboration
- Businesses should leverage software sooner rather than later in order to have a stronger foundation
[09:59] – [18:14] On Lease Accounting and Finance
- What is ASC 842?
- Understanding the true financial obligations of the company
- How this impacts the way we balance our sheets
- Mistakes people commonly do on the lease side
- Data should be easily accessible and digestible to avoid costly errors
- As hybrid and remote work continues, there is a greater need for a software like Occupier
[18:15] – [19:32] Closing Segment
- Reach out to Lauren!
- Links Below
- Final Words
Tweetable Quotes
“We wanted to build a product that truly corrals everyone around one piece of software.” – Lauren Bahr
“You want to make sure that you’re investing in scalable processes way sooner than you actually need it because you’re not going to have enough time to build a foundation when you’re tripling in size.” – Lauren Bahr
“Having everything in a place that’s easily digestible can avoid a lot of heartache and money and mistakes.” – Lauren Bahr
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Connect with Lauren directly at lauren@occupier.com and follow her on LinkedIn.
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Want to read the full show notes of the episode? Check it out below:
[00:00:00] Lauren Bahr: I would say, you want to make sure that you’re investing in scalable processes way sooner than you actually need it because you’re not going to have enough time to build a foundation when you’re scaling, when you’re tripling in size, right? Now’s the time to do it when you’re stable.
[00:00:28] Sam Wilson: Lauren Bahr is the VP of finance at Occupier. Lauren, welcome to the show.
[00:00:33] Lauren Bahr: Hello. Thank you so much for having me, Sam.
[00:00:37] Sam Wilson: The pleasure is absolutely mine. Lauren. There are three questions I ask every guest who comes to the show” in 90 seconds or less, can you tell me, where did you start? Where are you now? And how did you get there?
[00:00:45] Lauren Bahr: Yes, I love it. So I started at PWC. I’m an accountant by nature of school for accounting. So entered the audit practice at PWC, then transitioned into more of a consulting, technical accounting consulting, but also process consulting, helping, accounting teams with our month-end close process, one of the most terrible processes for a lot of accounting teams, then, you know, transitioned into a startup as the head of corporate accounting there. And I’m not kidding you, my very first day at that, company, I met the Occupier team. That was because the real estate team was like, Hey Lauren, you need to sign with Occupier. So like, I don’t even know who Occupier is, why do we need them, blah, blah, blah. So by lunchtime, I. Not a chance. We’re not signing with Occupier and basically fast forward a year and a half later, the Occupier team’s like, Hey, remember when you said absolutely no to us. Well, we’d love to have you come work for Occupier. So, they had made a lot of headwinds in a year and a half. Obviously, I wouldn’t be here and I didn’t believe in the product and the story more importantly, like who we’re trying to help along the way, but a little bit of luck and some hard work is I guess why I’m here at Occupier now.
[00:02:04] Sam Wilson: That’s awesome. So let me get the story straight. You’re working somewhere. It’s your first day on the job and they’re like, Hey, we need to bring this new client on board. And you said, no, I don’t want to work with them.
[00:02:12] Lauren Bahr: Yeah. I said, not a chance. Love it, but it’s not going to work out for us because they hadn’t built out certain features of the product suite yet. So basically I sat by myself at lunch because of Occupier.
[00:02:29] Sam Wilson: And then 18 months later, you’re working, not just, you know, service provider slash client relationship, you now work directly with them.
[00:02:36] Lauren Bahr: Yep. So, you know, that was about a year and a half ago, so. It’s been good.
[00:02:43] Sam Wilson: There must have been a compelling story somewhere along the way that said, Hey Lauren, we’ve got a really cool product and we’re going to solve all the world’s problems. And you said, yeah, I believe in that. What is that?
[00:02:54] Lauren Bahr: So my story with this is I have firsthand experience with it that I knew as soon as I had gone through implementation at the said company with a different provider that okay, I needed to go through that experience to realize the value of Occupier. And without that, I don’t think I would’ve been able to really emphasize as, you know, as big of a deal as it is. So I’m happy I went through that, but now I’m happy to help other people on the other side.
[00:03:25] Sam Wilson: So tell me, so what does Occupier do? Yeah. Give us the skinny on what Occupier does, what industry problem they’re solving. We’ll love to hear all that.
[00:03:33] Lauren Bahr: Yeah. So we are a lease management solution. We start with site selection, helping real estate teams even select where they want to open their new offices or retail spaces, managing that whole process with legal, designers, everything that goes into opening up a new space. Then we take that information into our lease administration tool, which is going to organize all of your critical dates, run schedules, clauses. You’re going to be able to search through if you wanted to search through your security deposit clauses across your entire portfolio, very Google-like, functionality that makes it really, really seamless to do that. And then all of that information feeds into our least accounting product, which helps companies maintain compliance with ASC 842 and IFRS 16, which are the new lease accounting standards. So we make it extremely easy for finance teams to adopt the new standard.
[00:04:30] Sam Wilson: You just said a lot of things that don’t mean a lot to me.
[00:04:32] Lauren Bahr: I know I said a lot of things. I don’t know if that’s a high-level view.
[00:04:37] Sam Wilson: No, I love it. I mean, it’s funny ’cause you say stuff like that and I go, you know what? No pun intended, but that’s not the space I’m in. You know, I’m not in the multitenant business to business retail, industrial, whatever, you know, I don’t have 500 tenants and go, okay, especially on that scale. I’m familiar obviously with multifamily loans like that, but it’s like, okay, this is kind of a very nuanced product. It’s like I’m exposing my ignorance here, right on the podcast. But when I think about lease management, especially as it pertains to, you know, large retail strip centers or something like that. I keep going back that as my example, I usually think, okay, there’s a broker out there somewhere that handles that leasing side of thing, they’re a leasing agent. Do you work with them? Do you work with the owner? Where in this mix do you get involved?
[00:05:20] Lauren Bahr: Yeah. So we do work with some brokers. So some brokers will just be helping their clients, just select spaces. Other brokers also have been leveraging us to perform lease administration services where it’s more of, again, managing those rent schedules. Okay. How much is owed rent? We have a rent abatement period. So a free rent period for six months. Okay, when do I really have to start paying rent? And then also managing all of those clauses and rights that you have. Most importantly too, is the renewal options. Let’s say that, you know, you’re not in love with a space and you have a renewal option on year four. If you kind of forget where that renewal option is in all of these massive heaps of lease documents, you may miss it and be forced to stay in that space. So not only is it going to be costly to stay in the space that you don’t want to be in, but it’s also just a strategy-wise impact too.
[00:06:17] Sam Wilson: Right. So you’re saying from the tenant side, you guys also kind of interface with the tenants and letting ’em know, Hey.
[00:06:22] Lauren Bahr: Right. So usually, we can sometimes be an extension of a client’s real estate team. If they don’t have a formal real estate team, then oftentimes we could be working with the broker as well to support their processes.
[00:06:38] Sam Wilson: Got it. Okay. That’s really, really cool. When you look at this product, what were the main, I get what you’re doing, but tell me what were the main pain points that you guys said, Hey, we can solve this in the industry?
[00:06:49] Lauren Bahr: Yeah. So I think our biggest differentiator, I think there’s two. One is the user experience. Man, if you just log onto it, it looks so fresh and so seamless, very intuitive compared to some of the other competitors on the market. And then the other thing was that we wanted to build a product that truly brings, corrals everyone around one piece of software. And so other competitors may only do lease administration or lease accounting, but there’s so many different people involved in leases from the finance team, real estate team. You have HR, corporate, IT. There’s a ton of different hands in this jar, right? And so having a software that everyone can truly collaborate on or a single sense of truth is, you know, kind of paramount in my mind.
[00:07:44] Sam Wilson: Right. No, that absolutely makes sense. Next question for you is this. When someone looks at your product, at what point in the process, at what point in their scaling process do you say, Hey, that’s what it makes sense to reach out to you or a member of your team and say it’s time to bring Occupier on? I mean, I’m thinking if it’s me. Yeah. And let’s say I own one building that has four tenants in it. I probably don’t need your services, but maybe I’m wrong.
[00:08:06] Lauren Bahr: Yeah. So I think about it more for, I think at least, you know, around 10, 15 leases, you may want to consider leveraging software, but also if you think about your growth trajectory over the next two years, if you have a real estate team that’s very active, maybe you are a new gym, you’re the new CrossFit, right? And you’re planning to expand into all of these new markets. You may need software way sooner rather than later. You know, I went through this experience at one of my previous companies. We had doubled in size. We went from 25 locations to 50 locations and within three months which is crazy to go through that. But it really emphasized that we needed a software to help organize everything, right?
[00:08:58] Sam Wilson: Right, and that goes back to the title of the show, which is How to Scale. And I mean, that’s something I’ve heard, you know, from many, many people on this show, which is that, you know, you should be just as afraid of success as you should failure. It’s like, ’cause you know, for you guys going from 25 to 50, all of sudden’s like, oh crud, like, are we actually prepared for this?
[00:09:15] Lauren Bahr: Oh, yeah, I know, right? Yeah. I would say, you want to make sure that you’re investing in scalable processes way sooner than you actually need it because you’re not going to have enough time to build a foundation when you’re scaling, when you’re tripling in size.
[00:09:31] Sam Wilson: Right. Right.
[00:09:32] Lauren Bahr: Now’s the time to do it, when you’re stable.
[00:09:35] Sam Wilson: Right. And that’s a hard thing to do. And I think it’s one of the themes I’ve watched over the last probably six, eight years is watching the teams that build, like you said, they build the platform, they build the foundation long before they need it, like, okay, we’re going to build this out. It’s probably a little oversized for now, but soon enough we’re going to need that. So I think that’s a really helpful piece of information. You threw out some things I don’t even understand, which is a lot of what you said, but adoptions and lease accounting rules and things that changed.
[00:10:05] Lauren Bahr: Yes.
[00:10:05] Sam Wilson: Can you break down for us what’s happened in the industry and what all that means?
[00:10:09] Lauren Bahr: Yes. So it’s probably the biggest thing to happen in lease accounting in 20 years. So what’s happening is right under the historic legacy gap, ASC 840, operating leases, which is the majority of leases did not have to be on the balance sheet. And instead, they were kind of tucked away in the notes and disclosures of financial statements. And so financial statement users just could not get a good grasp of what company’s true, liabilities were and their true financial obligations. And so. With that ASC 842 came to light and said, no, no, no, everything has to come on the balance sheet so that everyone can understand the true financial obligations of companies. You know, it makes a ton of sense because most of the time, you know, real estate is the second largest expense for companies, only second to payroll most of the time. And so of course, you’re going to want to have more insight into that.
[00:11:16] Sam Wilson: Right. And that makes a lot of sense. Yeah. And you’re saying that from the tenant perspective, like their lease has to be on their balance sheet.
[00:11:23] Lauren Bahr: Yep, yep. So from the tenant perspective, yep, because now it’s going to come in as a right use asset versus maybe the landlord probably owns that it’s probably just a fixed asset for them. So you just being able to utilize the space for 5, 10 years, whatever your lease term is, Hey, that has to come on the balance sheet, but also your remaining lease payments also has become on the balance sheet in the form of a liability.
[00:11:49] Sam Wilson: Right. Yeah. Just like, I guess, just like a loan would.
[00:11:51] Lauren Bahr: Yeah, exactly. It’s just like a loan. Very, very similar.
[00:11:55] Sam Wilson: Yeah. There’s an outstanding obligation and it’s due every month, just like a loan payment.
[00:11:59] Lauren Bahr: Due every month. Yeah. So it was just this kind of crazy loophole that existed in the financial statements for such a long time. And so they’ve been talking about it for, you know, just kinda like when is this going to go into effect? And so think ultimately it’s for the better.
[00:12:18] Sam Wilson: Was the advantage in not disclosing that just making financial statements look better or what was the reason?
[00:12:24] Lauren Bahr: Yeah, so the advantage was just pure, I mean, it does look better from a balance sheet perspective, but I think it was also just process-wise if finance teams could actually do the necessary work in order to get what that right-of-use asset and the lease liability balance would be. ‘Cause really they have to create amortization schedules, very similar to like a loan amortization, like even just a mortgage loan. They have to do that for every single lease that they have. You know, that’s a lot of work for teams to pressure our teams into doing. And actually, this was supposed to be in effect for private companies in 2020. And they said you know what? You guys are going through enough. We’re going to delay it until 2022. And so there’s been some reprieve because I know how much of the process changes this.
[00:13:21] Sam Wilson: Right, right. That’s really interesting. Absolutely. Interesting. Tell me this, what are some problems that you see that people are or are mistakes that you see people making on the lease side that you could say, or either the tenant or on the landlord side that you’d say, Hey man, these are some really avoidable problems. And maybe you guys solve, maybe you don’t, but what are some things you see on that side you’d say there’s some mistakes we could very easily avoid.
[00:13:47] Lauren Bahr: Yeah, I think it’s just not having clear access to the data points within your lease schedule. So for instance, I think it came out pretty recently that Gap, had missed, Gap, the clothing company had missed one of their critical dates. And how they have had this elevated in a software that’s telling them, alerting them like ours is six months in advance. Hey, you have a critical date. You have to do something with that, right, having everything in a place that’s easily digestible can avoid like a lot of, lot of heartache and money and mistakes.
[00:14:22] Sam Wilson: Yeah, I think that’s absolutely great. Cool. I’ve absolutely enjoyed this. There’s been a lot of fun learning about, you know, Occupier what you guys do, lease administration. One of the things I didn’t, I guess, I’m going back through my notes here, one of the things we didn’t really get to talk about much was on the kind of new space development side of things. We’ve kind of talked a lot about, you know, once the product is in place and once you have tenants in place and how you guys. And kind of management that whole side of it, but give me a breakdown on the site development site acquisition, what are you guys doing on that front? I guess that’s a part of your business I don’t think I quite understand.
[00:14:58] Lauren Bahr: Yeah. So what we do is right now, that process is usually handled in Google sheets, Excels or massive email threads between your broker, your real estate team, your legal team. And so what we do is basically have all of that information within our software product that says, Hey, we’re trying to open up a new office in St. Louis. Here are the five locations that we’re going to tour. Here are the thumbs down, thumbs up for if people liked it when they toured, when the schedule of tour is, what stage it’s in, if it’s in legal review, if you’ve negotiated the contract, what was the original terms of this, the contract. And so you can kind of really play out the entire life cycle of just selecting your space.
[00:15:50] Sam Wilson: Wow. That is really, really cool. And it sounds like you guys are, I mean, again, if in 18 months you said 18 months ago, this company was not at a point where you felt like it was somebody you wanted to work alongside. Now you work alongside ’em, you guys are, you know, rapidly developing a very useful product, it sounds like, otherwise you wouldn’t be there. What are some things that you look at just on the horizon you say, Hey, here’s some other problems in the industry we haven’t yet found a way to solve, but we’re actively working on.
[00:16:16] Lauren Bahr: Yeah. You know, I think the question that’s on everyone’s minds is how the real estate landscape is going to change as people are trying to do hybrid work or remote first work. And how does real estate play into that? Does that mean now that you have smaller hubs and the cities that most of your employees are in or how do you, do you have just one major hub and slide people in? And so there’s a lot of different question marks on the real estate strategy, as it relates to people in, you know, in companies right now.
[00:16:53] Sam Wilson: Interesting. Interesting. And what are your guys’ thoughts around that? I mean, is there a way that you see you guys kind of plugging into the industry and becoming problem solvers?
[00:17:02] Lauren Bahr: Yeah, you know, I think with this, it really emphasizes even more a need for Occupier just because there’s going to be different types of lease schedules and probably even more leases is what the trend that we’re seeing is that people are kind of breaking out. If you look at our company, you know, we only have less than 50 people, but we have four leases because now we’re all scattered throughout the country, right? And so you can see that permeate between a lot of other companies as well.
[00:17:32] Sam Wilson: Right. Yeah, absolutely. That’s an interesting comment where you say that you’ll see more leases and obviously your case in point is your own company, ’cause you’re right. Keeping track of four different leases across four different building types and sizes and locations and …
[00:17:45] Lauren Bahr: Yeah. Yeah, it’s interesting. ’cause people have this notion that, oh, well, leases are going to be gone because no one’s going into the office anymore. Well, that’s not necessarily true. And you always have retail space as well. And so leases are not going anywhere unfortunately.
[00:18:01] Sam Wilson: Right. I can’t imagine that, but that just proves the, yeah. Proves the need for what you guys do. I think that’s really, really cool. And love how you’re you’re thinking ahead there again, that you’re going to see more leases, not fewer, so absolutely awesome. Lauren, before we sign off here, is there anything else that you’d like to share with our guests maybe that I didn’t ask that you feel like is really important or valuable piece of Occupier you’d like to share?
[00:18:23] Lauren Bahr: You know, I think our team is wonderful. And I would love to get to know anyone that’s listening to this, either a demo or just, anything, an email. So, you know, it was been a pleasure talking to you today, Sam, I think you asked some lovely questions.
[00:18:40] Sam Wilson: Well, thanks. Thanks. No, no, yeah. I’m not sure I believe you, but I thank you, nonetheless. Last question here for you, Lauren. If our listeners want to get in touch with you or learn more about you, what is the best way to do that?
[00:18:49] Lauren Bahr: Yeah, the best way to do that is on LinkedIn, Lauren Bahr, or you can email me directly at lauren@occupier.com.
[00:18:57] Sam Wilson: Awesome. And if you’re looking for her on LinkedIn, that’s Lauren Bahr, spelled B A H R. Lauren, thank you so much for coming on today. I certainly appreciate it.
[00:19:06] Lauren Bahr: Thank you so much again, Sam.
