Aligning Lease Accounting, Administration and Real Estate

Lisa Krizek is an esteemed executive who has led real estate leasing and accounting teams for brands that are household names. Now she's giving back as the Executive Director of the NRTA. 

Krizek recently sat down with Matt Waters, CPA for an enthralling episode of The Lease Alert podcast. Let's see what Matt and Lisa had to say about the power of a professional network beyond your office walls.  

Matt Waters: Hello and welcome to The Lease Alert where we have conversations with the smartest, most interesting people at the intersection of real estate, leasing, and accounting. I'm your host, Matt Waters. Let's learn something together. 

Lisa, welcome to The Lease Alert podcast.  

Lisa Krizek: Matt, thank you for having me. I'm very excited about the opportunity to talk to you about a field that I love and a career that I really enjoy.  

Matt Waters: Thanks for being here. Well, let's dive right in. I know you have a wealth of experience. As I mentioned, it covers real estate leasing and accounting. 

Can you tell us about how all of those disciplines came together in your career?  

Lisa Krizek: Sure. [I’ll start] probably with my previous employer, Ascena Retail Group. I started in 1994. At that time, it was known as the Dress Barn. And prior to that, I had been the Director of Lease Administration for Melville Corporation, I think a lot of people don't even recognize the brands anymore, but two actually did last very long. They're still out there, Marshalls and CVS Pharmacy.  

But at one point they were under a holding umbrella. With about 14, all their retailers like Tom McCann, Chess King, Foxmore, Linens and Things, and some of the brands that are no longer with us. At that time, I had been a real fresh graduate right out of college but really interested in retail and shopping. 

I came upon this advertisement for someone looking for a lease administrator, as I said, for Melville Realty Company, which was the real estate arm of Melville Corporation, which was the holding company for all of those retailers. They had about at that time 9,000 different leases, because they were also the license agreement for the shoe department for Kmart stores. 

They had their headquarters in Mawa, New Jersey. I started my retail career with Melville Realty in Mawa, New Jersey. Coincidentally I ended my retail career with a senior retail group in the same building in Mawa, New Jersey. We had about 9,000 leases. It imploded in 1995 and 1996. 

It was divested and I found myself looking for a new job and the folks at Dress Barn, I had known a wonderful person, still a wonderful person, Elise Jaffe, who did their real estate. We met a few times at a couple of industry functions. She asked me if I would be interested in coming over to the Dress Barn team. 

I joined Dress Barn in February of 1996, and I never looked back. At that time, we had about 400 locations and over a 27-year term with Dress Barn, we grew to over 7,000 locations with seven grants. We were very successful in the mergers and acquisition area and trying to figure out, okay, how do you get all of this information from a platform into your platforms and what do you do? 

I wouldn't have been able to do that, and I would not have been able to climb the corporate ladder, so to speak, if I also wasn't a member of the NRTA at the time. The NRTA, to me, was an amazing opportunity for me to learn about real estate administration education. It was actually through my connections with NRTA that I realized we were kind of a little lopsided when I first joined Dress Barn. 

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We had real estate. But accounts payable had all of the occupancy expenses, but real estate and accounts payable never spoke to one another. They very rarely knew whether a store was open or closed. They very rarely knew whether a store had renewed and the terms and conditions of those store terms or store leases had changed. 

I said, well, this is a little upside down in a perfect world, what should that look like? I really leaned heavily into the NRTA founders Mo Laliberte and Paul Kinney. Mo was a counterpart of mine. He worked for CVS when I worked at Melville. Paul stumbled upon him because they both shared a standalone location in Massachusetts where I believe Friendly's was a subtenant of CVS. 

They got to know one another because they could figure out who was responsible for fixing the parking lot, so to speak. I learned all the ins and outs on who was responsible - our partners should be internally - or learned where all of our external communications needed to be and how many different people within the landlord organization, we needed to partner with in order to be successful. 

It started honestly with good administration of the terms and the conditions of the lease and everything in my world was per the terms of the lease. We weren't looking to change the terms of the lease. We were looking to adhere to the terms of the lease. By doing that we expected that the landlord would be in good faith compliance with the terms of the leases as well. 

As our portfolio grew or as the Ascena portfolio grew, so did my responsibilities and so did my teams. We always challenged ourselves to ask, what makes sense? What's the right way to do this? Is there a better, is there a faster or more efficient way of handling the real estate? Because we found that we had a tremendous amount of real estate within the portfolio.  

Matt, you know better than anyone that real estate can be either number two or number three on the P and L behind cost of goods sold and behind payroll. You're talking about a very large number. 

We just wanted to make sure that we were in compliance with the terms of those leases as best as could be. We were also a public company. We had an obligation to our shareholders. It was really through the building of what I thought was a great and successful team that we were able at the end when we got to the 7,000 store mark, to be managing about a billion and a half in occupancy expense. It was significant.  

Matt Waters: That was from the lease administration side of things and the accounting side of things All under your group.  

Lisa Krizek: All under my group. Historically it was the old 840 straight line, we worked very closely. 

I had a wonderful analyst on my team that made all of those necessary calculations for us. As 842 was hovering around and 842 was coming for about a 15, 16 year period. Before we finally pulled the trigger, at that time, again, it gave us an opportunity to just kind of look at our processes that we had internally. Were they correct? Did we have the information that we needed to in order to make sure that we had the right information for the 842 disclosures? We really reached out even further. We partnered with our financial team. I would tell you historically, it was the real estate people, the legal teams, the lease administration and accounting teams. 

We really needed to kind of hook in or bring under the tent, so to speak, our financial team partners. Both our internal partners, as far as internal reporting, and external partners - at the time we used Deloitte. They actually helped us adopt, and it was a major undertaking to adopt with over 7,000 leases. 

Matt Waters: Oh, I bet. That's fascinating, Lisa. Thank you for sharing that journey with us.  

A couple of things I want to highlight. One, you pointed out that NRTA has been a big part of your journey, and that's actually a way that you're able to network, and we're going to talk more about NRTA later, and it seems like that's actually a better way to network than the way Paul had to do it at one point by squabbling over common area maintenance with parking lot repairs. 

Two, I wanted to highlight, and I speak about this all the time, a matter of fact, I've spoken on this for The NRTA and students probably get tired of me saying it, but I will continue to say it - a key to success in lease accounting and lease administration and real estate is communicating with the different groups. 

Some companies have all of those in one area. Some companies have those in different areas of the company, kind of siloed, even sometimes reporting up to different VPs and executives, but regardless, communication is so important between accounting and lease administration in particular, and I tell people this all the time. 

You can't perform the duties of a lease accountant without the data that lease administrators provide in the lease abstract. That's actually the key variable. Most of them give you the ability to make lease accounting calculations. I love the way you highlighted that, that those teams need to be so integrated. There's no way to figure out what to start or what to stop or continue without that communication.  

You touched on something else that I want to highlight - really two things. You talked about growing through acquisitions, business combinations sometimes called purchase accounting. 

Then you also talked about how sometimes retail and other companies shrink real estate footprints. There's this constant ebb and flow, I would say, of expanding your real estate footprint and shrinking your real estate footprint. It sounds like you've lived through that on several different occasions. 

Can you give us a few lessons learned from growing and shrinking real estate footprints?  

Lisa Krizek: It all circles back again to using that NRTA network. Because there we have the opportunity to talk to other people who are in the roles who have the same deliverables that we do and may have actually experienced exactly what it is that we're trying to problem solve for. 

I will tell you that I learned about portfolio optimization from two or three of the speakers that I was fortunate enough to attend. We also learned about property insights through tools that we were exposed to. I would tell people probably the best advice I can give you is never stop learning. The need for continuing education and the exchange of ideas is kind of a cornerstone of attaining any high professional standard.  

I will tell you, organizations are going to continue to change, especially in this quickly evolving marketplace. What that means is that folks are going to be asked to do different things with their real estate. 

Historically we were primarily retail. In the past, I will tell you probably a good percentage of the attendees were retail focused, but now these folks are being asked to participate in different types of thought leadership per se. What does that future look like?  How will those organizations work and distribute with the merger of brick and mortar and e commerce, what do those real estate classes look like and how do you steward those? How do you protect your organization?  

Those are some of the lessons that I was always challenged with because there's always going to be something new. Change happens. Change is not ever easy.  Change management is not always easy. I will tell you that things like this podcast are valuable because they're letting you know you're not in this all alone. There are other people, other resources out there that can help, other organizations that can help. NRTA has been great on the cusp of this and probably one of the few organizations that I know that has been dedicated a hundred percent to education and to educating members specifically to improve profitability. 

Matt Waters: That's fantastic.  

Lisa, I love your passion about learning and education and, and networking. It sounds like NRTA has been a huge part of your success and your journey. I'll say it's kind of emerged as a common theme this season on the podcast.  

I might not even remember everybody who has mentioned a theme, but I'll tell you, we've had a CPA, Harvard MBA alum who has now founded a company. She said her biggest break in her career came not through Harvard, but through the accountant’s professional organization, AICPA. Then we had a real estate broker who has had extreme success in his field. He said, basically, he closed the biggest deal of his career that anybody in the real estate brokerage industry would say was akin to winning a Master's - he closed that deal, utilizing knowledge from a CoreNet conference, which of course is the organization that a lot of real estate brokers and corporate real estate professionals are a member of.  

Then we had another gentleman who is now a successful vice president at a major one of the top brokerage firms in the world. He runs their lease audit practice. And he said he learned so much from NRTA and NRTA has given him some of the biggest breaks in his career.  

Lisa, now I hear you telling me that NRTA also proved to be a vital part of your career progression and, and the experience that you had there networking with people, learning from instructors, really made a big difference in your career. 

Now I also know that you have transitioned to becoming the Executive Director of the NRTA. If there was any question before about if you're passionate about this topic, now we can remove all doubt.  

You're devoted now to advancing the mission of NRTA and, and I wanted to ask you even more detail, what's the NRTA, first of all, and what is the NRTA up to these days? 

Lisa Krizek: Let me backtrack just a little bit because I don't think I would have attained the vice presidentship in my role if it hadn't been for the NRTA and the networking and quite candidly the friends that I met along the way.  

What's great about the NRTA is that it is a hundred percent volunteer base. Everyone who is a member is a volunteer. Everyone who is on our committees is a subject matter expert in the industry. Everyone who speaks for us is a member of the industry. I don't know any other volunteer-based organization out there. They were tremendous for me in providing me guidance in always being there when I asked a question.  

If I could say anything to folks, don't be afraid to ask the question. The only question that's a bad question is the one that's never asked. Ask the question and get some information and talk to people about what your potential solutions could be. 

As I said, I learned about portfolio optimization from the NRTA. I learned not to be afraid to close a location and to try to reposition it. I also had a CEO at the time who truly believed the mantra, “If you did what you always did, you get what you always get.” You need to kind of change things up a little bit, rebrand yourself, redevelop yourself, and really stay in tune and understand your customers. 

Honestly, that's what NRTA does. They address topics that are impactful to our members today and also, what will be impactful in the future. We've kind of broadened the real estate assets that we provide both in the curriculum and content for. It's because we recognize that there are a number of challenges and opportunities that various organizations are trying to work through. 

I can tell you, I learned something every year, and I went back 27 years in a row, I learned something every year. I think that's why when Paul Kinney decided to retire, he kind of reached out to me and he said Lisa, you've been on the journey. He said, you're one of the few people that I know that's only missed one conference. 

I only missed one conference, and it was in 2001. It was mostly because it was right after Sept. 11th, and my husband had lost a cousin. Wow. Imagine going for an interview in that restaurant that was all the way up at the top of the building.  

Matt Waters: Oh, no. I'm sorry.  

Lisa Krizek: It was awful, but that was the only one conference that I ever missed because I was afraid to fly at the time.  

Paul said to me, “I don't know if I could replace your energy.” I had always volunteered on the conference committee. I had always volunteered on the curriculum committee. Again, it just gave me opportunities to connect with people and to talk to people and see if they were facing, their organizations were facing the same struggles and challenges that we were. 

I don't know if people realize how vitally important that is to have that connection with someone who's doing that in your role. As I said, I don't know any other organization out there that's able to do that. Again, it's completely nonprofit. It's completely 100 percent volunteer and it's dedicated to real estate administration education. 

I don't know of any other resource out there like that. I think it's easy to find us. All you have to do is Google NRTA.org.  

We have several different opportunities. We have a conference that's an onsite event that's going on right now from Sept. 8 to the 11. We would love to have you there. 

We have probably close to over 60 classes that we're running in addition to another 20 or 24 breakout sessions. All, as I said, on topics about real estate, what to do with real estate. We focus on occupancy cost management. We focus on legal negotiations and drafting. We focus on real estate management, not so much on the site selection, because the baton has already been handed to us once the lease is signed what's a good, effective way to maintain relationships with your landlords during the terms of those leases. What does that look like? We have some leadership classes. We have some technology classes for those that feel perhaps they want to hone up a little bit on their Excel skills, their PowerPoint presentation skills, or fix some letter drafting some business letter writing and letter drafting type classes. 

It's amazing. As I said, I have gone every year. I've attended classes every year. Even as the executive director, I will attend a class and I find it invaluable.  

Matt Waters: Awesome. Now, I have to ask you, Lisa, and I think this ties in pretty well. You mentioned the pace of change and the way organizations and companies are always changing, shifting. 

NRTA actually shifted as well. A few years ago, I'm talking about the name. When I first became aware of NRTA, it stood for the National Retail Tenants Association. Now the name shifted slightly, but it shifted, nonetheless. Can you tell us about how that took place?  

Lisa Krizek: Sure. We shifted and we are now known as the National Real Estate Tenants Association. 

It was really an outreach on our part to find out what types of uses the landlords were putting in all of those other boxes that the retailers vacated during COVID. There was always a cycle to real estate pre COVID, but it really accelerated during our pandemic. We wanted to know what was taking the places of those traditional retailers. 

We found a lot of different types of uses. We found insurance companies, we found childcare centers, we found banks, we found medical offices. We reached out and we said, look, we know you have a portfolio of leases. We have talent, and we have teams that can assist. We know in some instances these are smaller portfolios in total maybe you have one particular medical facility that has 10 or 20 leases. 

They're really looking at staffing and operations. They're not really looking at real estate management. Let us help you let us expose you to some vendors that can assist to some tools that can assist to some people that can assist. We recognize that these types of tenants have some of the same challenges. 

As the traditional retailers do, and we wanted to let them know that we were there for them and that we had this program. Slowly, we have been adapting to see, is there anything that we need to do differently when we're speaking about medical leases, as opposed to a regular traditional retail lease? Is there anything that we need to address differently when we're speaking about financial or banking type leases?  

Then when we do, when we're talking more about traditional leases, we even have some parking lot people, the icon parking lot people are members. These are folks that recognize the need to, again, administer the terms of the lease properly so that they can add to their company's bottom line. 

That's the goal. The goal is always to make a good location better. At a great location outstanding. That's the challenge. We don't necessarily ask noncustomer facing roles. We don't necessarily impact sales, but we can impact the bottom line. That's what the NRTA is all about. We're all about helping impact that bottom line, again, through training, through resources, and through tools.  

Matt Waters: What a great point about the bottom line. You're right. It's easy for companies to lose that perspective. That's something else that I would like to point out. Let's take a retail company, for example I worked at Home Depot, and I know a little bit about the margins there and the margins at other retail companies. 

I know about how much money real estate initiatives can save. Let's say just hypothetically, let's say a real estate deal took place, maybe a shift of location, a right sizing of an office or something like that. Let's say it saved a million dollars a year, which is completely reasonable. 

Well, that's great. That might just be an asterisk somewhere. If you tell the CFO, we saved a million dollars - we're talking about a hundred billion dollar company in the case of Home Depot or something like that so a million dollars is great. But think how many hammers and nails Home Depot would have to sell to drop a million dollars to the bottom line. It's a lot. We're talking about a significant impact and it's all in how you present the numbers and to learn how to present the numbers. In the best possible way, you have to gain knowledge. 

I'm a big believer in the NRTA and supporter. As a matter of fact, I'll be at the annual conference this year. Your volunteers have already convinced me to volunteer to teach three classes. I'm really looking forward to that. I hope that folks will attend and pick up some of this great knowledge that we've been talking about. 

Also take advantage of the opportunities to network with peers from across the country.   

I do want to ask you one more time, Lisa, can you give us the details again, the dates and the, and the location for the NRTA conference this year?  

Lisa Krizek: Absolutely. This year, the onsite event is Sept. 8th to the 11th, and it will be hosted at the Gaylord Texan Resort and Convention Center, and that's in Grapevine, Texas. 

We also have a couple of other opportunities as well. Those that we consider to be our virtual offerings. We right now have a certified commercial lease administrator certificate, which we've actually tapped folks like Matt and a few others in the industry, because we really want to be known as the best in class. 

We are offering a best-in-class certificate to people who want to truly be the best lease administrator that they can be. We are marketing this certificate program to HR departments within various employers and organizations and let them know that if they hire somebody who has taken this certificate, they will succeed because we will train them or have trained them to succeed in this role. 

So we have an online certified commercial lease administrator program that will kick off again on Oct. 8th and we will also be offering top five challenges what we call our classroom live opportunities which believe it or not CoStar has helped us host these in the past and these are going to be just tricks and tips for the top five challenges in lease administration, the top five challenges in lease accounting, the top five challenges In a working in a hybrid work environment, because we know a lot of things have changed post-COVID as well. 

We do offer some virtual opportunities on top of the annual conference, and we hope that you guys take advantage of this. There's a lot of us out here who are telling you that this has been a very beneficial organization to be a part of. 

Matt Waters: For sure. Lisa, thank you so much for joining us today and thank you also for all the work that you do for the NRTA both in the past as a volunteer and now as the executive director. You're really making a difference for our industry. 

I'll give you my personal thanks and just say thank you on behalf of the entire real estate, lease accounting and lease administration community. Thank you so much for all the hard work and your efforts there.  

Lisa Krizek: Thank you. It wouldn't be possible without volunteers like you. I thank you too, because again, we are very grateful for those who are willing to pay it forward. 

As we have told our CCLA students, what they're going to gain is the experience, and they're going to hear the stories, and they're going to see where we made mistakes, and they're going to understand that, if there was a certificate like this, or if there was an organization where if I had been involved in this organization sooner, I could have avoided making that mistake. 

Matt Waters: Absolutely.  

Thank you for listening to The Lease Alert. I'd be grateful if you would like and subscribe wherever you listen. Until next time, keep learning and leasing.