Case Study Examples

Introduction

This case study documents a successful engagement we at Klug Limited conducted for a major property owner, showcasing our role as a strategic partner in maximizing asset value. What began as a standard market rent review for the anchor tenant of a prominent shopping centre—a national supermarket chain—evolved into a multi-faceted project. Through our expertise, we delivered a comprehensive result that included the recovery of significant historical back rent and a highly favorable negotiation for future rent and lease terms. This project serves as a powerful example of how our professional, strategic landlord representation can unlock substantial value and secure long-term financial gains. Critically, it also demonstrates the importance of engaging expert advisors in a timely manner to avoid the permanent loss of significant income.

A Two-Pronged Approach to Value Creation

Our engagement was defined by two key successes, achieved through a proactive and detailed approach to lease management.

Part 1: Uncovering Nearly a Decade of Lost Income

As part of our initial due diligence, we conducted a forensic analysis of the historical lease and sales documents. Our expertise in lease interpretation allowed us to uncover a critical, overlooked turnover rent clause that had not been correctly applied by the tenant for nearly a decade.

Our deep dive into the sales data revealed a pattern of underpayments spanning nine consecutive years. Our comprehensive analysis identified a total potential underpayment of over $1.5 million.

However, due to the six-year statute of limitations for commercial rent claims in New Zealand, a significant portion of this amount was no longer legally recoverable. This discovery highlighted a sobering reality: over $1.3 million in landlord income had been permanently lost simply because the issue had not been identified and addressed within the statutory timeframe.

Despite this constraint, we were able to issue a formal Letter of Demand for the most recent and legally enforceable period. This structured approach led to the successful recovery of over $180,000 in back rent, a significant financial win for the landlord that was realized before the new rent review negotiations had even formally commenced.

The Critical Lesson: Timing Matters

This case powerfully illustrates the critical importance of engaging expert lease advisory services on a proactive, regular basis. Had we been engaged earlier in the lease term, the landlord could have recovered the full $1.5 million in underpaid rent. Instead, the delayed engagement meant that over 80% of the potential recovery was permanently lost to the statute of limitations. This represents a substantial opportunity cost that could have been entirely avoided with timely professional oversight.

Our work not only recovered what was still legally available but also prevented further losses by ensuring the turnover rent clause would be correctly applied going forward. This case underscores a fundamental principle: proactive lease management is not a cost—it is an investment that protects and maximizes asset value.

Part 2: Strategic Negotiation and Future-Proofing the Asset

Running parallel to the back rent recovery was the primary task of negotiating the market rent effective from the upcoming review date. This process unfolded as a clear demonstration of effective, data-driven negotiation.

The negotiation began with the landlord and tenant issuing their respective notices, revealing a significant 42% gap between their opening positions. Each side was supported by their respective valuer's assessment. Through skilled negotiation and professional management of the process, we successfully bridged this gap over the following months, securing a final rent far closer to our initial, well-researched assessment.

The Final Outcome: A Comprehensive Victory

The engagement concluded the following year with a Deed of Variation and Renewal of Lease that represented a comprehensive victory for the landlord.

Financial Gains:

• Back Rent Recovered: A one-off payment of over $180,000

• Rent Uplift: An increase of nearly 20% on the previous rent

• Total Contract Value: The rent increase alone secured an additional six-figure income stream annually over the new long-term lease

A Strategic, Negotiated Outcome:

• Secured a Long-Term, High-Value Tenancy: The primary strategic achievement was securing a new multi-year lease renewal at a significantly higher rent, providing the landlord with long-term income security and enhancing the asset's overall value

• Structured a Favorable Long-Term Deal: As part of our landlord advocacy, we structured the final agreement to maximize value. By strategically leveraging terms such as the timing of future rent reviews and contributions to tenant works, we were able to lock in a substantial rental uplift and a long-term commitment from the anchor tenant, demonstrating a sophisticated and commercially astute approach to the negotiation

Core Competencies Demonstrated

This project showcases our powerful combination of professional skills:

• Forensic Lease Analysis: The ability to uncover hidden value and identify long-term compliance issues through deep understanding of complex historical lease documents

• Proactive Landlord Representation: The dedication to protecting our clients' interests and proactively identifying opportunities for value enhancement—and the expertise to act within critical legal timeframes

• Effective, Data-Driven Negotiation: The skill to manage a large gap between opposing valuations and achieve a superior outcome through professional, well-prepared negotiation tactics

• Strategic Asset Enhancement: The vision to see beyond a single rent review and deliver holistic value through back rent recovery, lease renewal, and favorable long-term outcomes

Conclusion and Key Takeaway

This case study is a definitive example of the immense value we at Klug Limited can deliver. By combining our meticulous analysis with professional and strategic negotiation, we not only met the initial objective of a successful rent review but also uncovered and recovered significant historical underpayments. The total financial benefit to the client—combining the back rent recovery and the increased rental income over the new term—approached a seven-figure sum, marking this engagement as a resounding success.

However, this case also serves as a cautionary tale. The over $1.3 million in unrecoverable back rent represents a permanent loss that could have been entirely prevented with earlier engagement. This underscores a critical message for all commercial property owners:

Proactive, expert lease management is essential. Engaging qualified advisors like Klug Limited on a regular, timely basis is not an expense—it is a strategic investment that protects your income, ensures compliance, and maximizes the value of your assets. Delays can result in the permanent loss of significant income that can never be recovered.

This case is a testament to the power of our proactive, expert landlord representation—and a reminder that timing is everything in protecting your investment.

This case study has been anonymized to protect client confidentiality. All identifying details regarding the property, landlord, tenant, and specific dates have been removed or generalized.