Rona is a well-known retailer specializing in home improvement, with over 450 stores and 26,000 employees across Canada. The company offers a wide range of products, including appliances, hardware, building materials, indoor and outdoor decor, and tools.
For all its commercial real estate requirements, including stores, offices, and warehouses, Rona depends solely on Nakisa Real Estate software (NRE) as its go-to property and lease management tool. With NRE’s advanced features, Rona is able to efficiently manage and optimize its real estate portfolios, enhance its relationship with its franchises and external partners, while maintaining control over its lease management and ensuring seamless operations across all locations.
“Software is user friendly. Ever since we changed to Nakisa Real Estate management software our work has been simplified and we have easy access to our historical data.”
Rona was in search of a user-friendly commercial real estate (CRE) solution that could provide comprehensive lease administration, lease accounting, and real estate rent management functionality, aligned with the requirements of a global retailer. Prior to the selection of Nakisa Real Estate management, they were using an in-house database built by a brokerage and advisory firm. This database was outdated, did not provide all the functionality they required, and was not able to evolve and bring new innovations that Rona CRE team needed. All the above challenges raised the need for a new software solution that could provide them with all necessary functionalities while also being able to grow with their business and operation needs.
Rona chose NRE as its primary tool for managing all its commercial real estate (stores, offices, and warehouses) and ASC 842 accounting compliance requirements. As follows, we will go over each of Rona’s requirements and how NRE has assisted Rona in meeting them.
It is common for retail companies to use a franchisee structure, in which an external party operates their store. Rona, for example, has a franchisee structure called Affiliate. In the retail industry, physical location holds a significant value, as customers often associate a store’s presence in a specific location with convenience and accessibility. Companies like Rona must prevent their affiliate from switching to another brand (e.g., Home Depot), to maintain control over the physical location.
To achieve this, the company will sign a head lease with the landlord and then sublease the same lease to the affiliate, we call this sandwich leases. This way, the company retains control of the lease and the physical location, pays the rent to the landlord (account payable) and receives payment from the subtenant affiliate (account receivable), or the subtenant pays the rent directly to the landlord. As a result, companies with franchisee structure must manage two leases per store: the head lease and the sublease.
A sandwich lease is a type of lease agreement in which a tenant leases a property from a landlord and then subleases it to another tenant. Retailers often use sandwich leases to retain control over their physical locations. Sandwich leases can be complex to manage, as they involve two sets of contractual agreements with distinct terms and conditions.
NRE streamlines Rona’s management of sandwich leases. With NRE, Rona can easily create two contracts for the same location, have complete control over the lease, and at the same time, ensure that the subtenant complies with the terms of the lease. Using NRE, Rona can compare clauses in both contracts, easily identify discrepancies and inconsistencies, enabling Rona to take corrective measures quickly. NRE also simplifies the re-invoicing of certain items by allowing Rona to generate separate invoices for the landlord and the subtenant, streamlining the payment process. In addition, NRE streamlines all activities related to the management of sandwich leases, including rent collection, maintenance, and dispute resolution. By centralizing these activities, NRE eliminates the need for manual intervention, reducing the risk of errors and increasing efficiency.
In the retail store management, there is a lot of communication between the real estate manager at the head office and the store operator. One of the primary responsibilities of the head office real estate manager is to ensure that lease obligations are met. Cleaning and garbage disposal are examples of tasks that the real estate manager will need to assign to the store operator.
Rona accomplished this by using NRE’s notepad feature to track tasks and set reminders. While the notepad feature was not designed specifically for this purpose, it has proven to be a useful and easy-to-use tool. The notepad can be assigned to a colleague and be tracked visually in the application or by email.
To ensure compliance with ASC 842 and centralize their lease agreements, Rona selected Nakisa Real Estate software to streamline their lease accounting processes. NRE is fully compliant with the lease accounting standards of ASC 842 and IFRS 16 and can also embed accounting policies within itself. By combining compliance tools and CRE software on a single platform, all expenses, POs, invoices, and accounting information are transitioned automatically and compliantly for reporting purposes. This eliminates the need for maintaining two separate solutions, keeping track of materiality thresholds, and ensuring proper financial reporting while reducing any potential human errors due to having siloed systems.
Rona has successfully improved their lease renewal tracking by utilizing NRE’s critical dates report and email feature. This tool enables them to have a comprehensive overview of upcoming critical dates such as lease expirations, rent increases, options to renew, or terminate, and sends automatic notifications via email to alert key stakeholders of upcoming deadlines.
Rona has also effectively utilized the “Expiries and options to renew report” generated by the critical dates feature for budgeting and operational purposes of upcoming lease expirations or renewals. NRE’s budgeting tool is flexible and has the capability of modifying the information for each store. Generating the budget is faster than in the past when they were not using Nakisa Real Estate.
By leveraging the critical dates feature, Rona was able to streamline their lease management process and stay on top of important dates and deadlines. This feature also allowed them to have more efficient budgeting and operational planning, as well as make more informed lease renewal decisions, ultimately helping to optimize their real estate portfolio.
Due to multiple acquisitions, Rona must manage multiple accounting systems, legal entities, and divisions, resulting in increased complexity in the payment generation and posting processes. Additionally, Rona has internal leases where one division leases to another division, resulting in a payable amount on one side and an internal receivable amount from another division. With the use of NRE, Rona can effectively manage these complex processes by assigning tasks and setting reminders for each store. This streamlines operations and enhances efficiency, improving overall performance.
Rona has successfully leveraged NRE’s rent table feature to gain a comprehensive understanding of their real estate costs. This easy-to-use feature allows users to easily access and analyze the cost of a store over a specific period, while also understanding the expenses and increases that contribute to the overall cost.
The rent roll report compares a store’s costs with the previous month, allowing them to quickly verify any discrepancies and flag any errors or information that needs validation before generating the payment in the ERP. Catching these errors before they are finalized in the ERP speeds up the process since otherwise the client needs to do a manual time-consuming adjustment.
Both these features provide data in a matter of seconds, allowing Rona to quickly access and analyze the necessary information to make strategic real estate decisions. With a clear and concise view of their real estate costs, they can make informed decisions around lease renewals, rent increases, and negotiating lease terms. By utilizing them, Rona has been able to streamline their real estate portfolio management and optimize their leasing strategies, leading to increased cost savings and operational efficiencies.
Rona has successfully utilized NRE to store all their real estate documents (leases, contracts, attach invoices to payment, and other critical documents) in a centralized location, a single source of truth, providing quick and easy access to critical information.
The system’s robust search functionality has made it easy to locate and access the necessary documents quickly, enabling them to make informed decisions more quickly.
Furthermore, the system’s secure sharing functionality has enabled Rona to seamlessly share information with external parties, such as landlords and legal counsels. This has facilitated better communication and collaboration, resulting in a more efficient leasing process.
The centralized document management system has also allowed Rona to reduce manual errors and improve the accuracy of their data. By keeping all documents in one place, the team was able to avoid duplications and inconsistencies in their data.
Overall, by leveraging NRE to centralize their real estate documents, Rona has been able to streamline their document management process, improve communication and collaboration, and increase the accuracy of their data. This has resulted in a more efficient leasing process, ultimately leading to increased cost savings and operational efficiencies.
With Nakisa Real Estate software’s permission controls, Rona can grant different levels of access to different users, ensuring that sensitive data is only available to those who have permission. Using this feature, Rona can give third-party consultants read-only access to the system, ensuring they can only see the information they need and cannot change or modify any data. This has proven to be a valuable tool for Rona, as it allows them to leverage the expertise of external agencies, while centralizing all lease-related documents in one location, maintaining control over their lease data management, ultimately leading to better decision-making and cost savings.
Rona owns multiple buildings and usually occupies big box or stand-alone buildings when leasing, or acts as a major tenant in larger buildings, like many global retailers. Rona faces significant costs in managing real estate taxes and making payments, so accurate tracking of all relevant information is crucial. Rona may also choose to appeal assessments, making it essential to keep track of those as well.
NRE provides a full-fledged solution for Rona to efficiently track tax assessments and payment information, ensure the building assessment value aligns with its market value and appeal the assessment if needs be, plan tax budgets, and make direct tax payments through the platform.
As a major tenant in various buildings, Rona typically pays provisional rent and receives a year-end reconciliation invoice. To streamline their processes and manage these payments accurately, they rely on NRE’s rent and reconciliation modules. The accrued rent feature is particularly helpful, as it automatically calculates the difference between the step-up in rent and the last confirmed rent until the new rent amount is confirmed in NRE. This allows Rona to better manage their financials and stay on top of their rental payments.
To generate comprehensive reports on their store, Rona needs to enter data for 40-50 different areas in the system, including selling areas, greenhouses, tool rental spaces, warehouses, offices, food service areas, kiosks, open staging areas, and more. Nakisa Real Estate software’s dynamic platform enables Rona to create a customizable list of areas that meets their specific reporting requirements. By tracking data across multiple areas, Rona gains valuable insights into their store’s performance and is able to make informed business decisions.
Finding the right CRE software was critical for Rona. After evaluating multiple vendors, Rona chose NRE for its robust real estate functionality, flexible and intuitive user interface, and the Nakisa real estate team’s deep expertise. NRE’s features were a perfect match for their requirements in property and lease management, compliance, and complex partnership scenarios.
NRE is a cloud-native solution that enables CRE teams to improve real estate portfolio management and accounting compliance by streamlining day-to-day operations.
Designed with commercial real estate logic in mind, CAM reconciliation, payment and rent tables, document centralization, permission-based accesses, percentage rent, customizable reports and dashboards, critical date alerts, currency translation, site selection, and a vendor payment portal are just a few of the industry-specific features available in NRE.
NRE is a comprehensive and flexible solution that delivers powerful real estate management capabilities to complex large enterprises, with bidirectional integration with ERP systems such as SAP and Oracle, seamless integration with lease accounting solutions, and compliance with key regulations such as ASC 842, IFRS 16, GASB 87, AASB 16, GDPR, and ITGC.
NRE is built on Nakisa’s microservices, which enable agile updates, scalability, and integration. All Nakisa SaaS components are monitored for performance and security 24/7/365.
NRE’s dedication to customer service and training was also a decisive factor. Providing exceptional customer service is a source of pride at Nakisa, and it distinguishes us from our competitors.