Starbucks Coffee Company



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HELPFUL HINT #2:

Change of Address or New Ownership? The only method for updating your information with Starbucks is to send a hard copy of new information to the Notice Address. For new ownership be sure to include the document of transfer (e.g. Deed, Assignment of Leases, etc.) as well as a current W-9 tax form for U.S. Landlords.

[pic] Direct Deposit for U.S. Landlords

Did you know Starbucks has changed its preferred method of payment to U.S. Landlords? Electronic Funds Transfer (EFT) offers direct deposit payments to payees located in the United States. Simply have an authorized signee fill out the enclosed Electronic Payment Set Up Form and fax it to the Disbursements Team at (206) 913-6258. Once Disbursements has all necessary information you can expect your first electronic deposit within 90 days. In the meantime you will continue to receive paper checks in the mail. Please note that, per the Lease, we can only remit payment to the legal Landlord or their assignees. Unfortunately EFT is currently unavailable for our Canadian locations.

Benefits of Signing Up for EFT:

✓ No lost checks! Never lose another check in the mail!

✓ Money on time, every time! Funds are transferred on the 1st of the month or the Friday before if the 1st occurs on a weekend or U.S. holiday.

✓ No fee to sign up!

✓ No extra trips to the bank! The funds are available immediately upon deposit.

✓ Remittance advice by email, fax or “EDI 820” 72 hours prior to electronic funds transfer. You get a record in advance of what will be paid.

Financial Lease Administration (FLA) Newsletter

|Notice Address for Certified Mail | [pic] |Notice Address for 1st Class Mail |

|Starbucks Store #_____ | |Starbucks Store #_____ |

|2401 Utah Avenue South, #800 | |PO Box 34067 |

|Mailstop RE-3 | |Mailstop RE-3 |

|Seattle, WA 98134 | |Seattle, WA 98124-1067   |

| | | |

Dear Landlord,

Welcome to the second installment of our FLA Newsletter. This newsletter is intended to foster Landlord awareness of our various processes and reduce confusion surrounding the handling of your Lease payments. The economic downturn over the past year has presented challenges for both Landlords and Tenants and we appreciate the care and due diligence you have exhibited in maintaining all of the shopping centers and locations where we are a Tenant.

As a reminder, the FLA department administers all financial terms and obligations under your Lease with Starbucks. FLA is organized by function rather than geographic region enabling an entire team to assist you rather than one individual. Examples of some of these functional assignments include:

• 1st year reconciliations

• annual reconciliations

• payment of monthly rent

• budget adjustments

• address & ownership changes

• utility management, and

• management of all Landlord communications via website, email and telephone.

Finally, if you still have questions about FLA going forward, go to our Frequently Asked Questions website, leaseFAQ.

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Starbucks Coffee Company

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HELPFUL HINT #4:

Tax Bills - If Starbucks is responsible for paying 100% of a tax bill, be sure to submit the invoice, with backup, at least 30 days prior to the due date to ensure a timely payment.

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November 2009

Mailing Starbucks a utility invoice?

For your convenience, Starbucks revised the invoice template for utilities and waste in an effort to eliminate landlord confusion and process payments more quickly. Please go to our website at leaseFAQ

and follow the instructions for obtaining a copy of this document.

This template should be used only when invoicing Starbucks for direct costs based on meter/submeter readings or trash invoices per the Lease. This form should not be used to invoice common area utility/waste charges.

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0.

Outstanding Balance?

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HELPFUL HINT #7:

Go Green! Starbucks cannot pay from monthly statements. By eliminating recurring monthly statements our Landlords save money and time and together we all help the environment.

In preparation for the upcoming 2010 calendar year, Landlords should be aware that, where provided by the Lease, Starbucks requires annual budgets with a breakdown of the monthly escrows (also referred to as operating expenses, taxes, insurance and utilities) so that adjustments can be made to the monthly recurring payments. Please take a moment to review the following points which outline the budget format that will expedite the processing of your annual escrow adjustment request:

• Adjustments cannot be made from a Landlord “Statement” or “Invoice”. An example of an acceptable budget request can be found at leaseFAQ - Budget Process.

• Utility expenses which solely/exclusively serve Starbucks are not an Operating Expense and should be listed separately by Water/Sewer, Electricity, and/or Gas. See Page 3 for more detail on how to bill us for utility expenses.

• Trash may or may not be an Operating Expense, please check your Lease for the definition of Trash and any provision for payment.

• Annual escrow payments will be adjusted once per year.

• As permitted by the Lease, monthly Annual Additional Rent escrow adjustments will be processed if:

o the Operating Expenses (CAM portion) do not exceed the ongoing cap stated in the Lease;

o the Annual Additional Rent reconciliation for the prior year is attached or was previously submitted;

o the escrow adjustment request is made before October 1, 2010; and

o the account has been consistently reconciled throughout our tenancy (e.g. annually).

Any request to adjust monthly escrows should be sent in writing to the Notice Address in the Lease.

HELPFUL HINT #3:

Using our reconciliation template is the fastest way to receive payment without delays or adjustments! To assist our Landlords in identifying the appropriate Lease information needed to perform an annual reconciliation we have developed the Annual Reconciliation Template and Instructions. Please go to our website at leaseFAQ and follow the instructions for obtaining a copy of this document.

Starbucks Escrow Payments

[pic]SCHEDULE CHANGE FOR U.S. RENT PAYMENTS:

Effective with the November 2009 rent payments Starbucks will

mail paper checks for our U.S. store locations closer to the first of

the month. This change will not affect our Canadian payments.

All U.S. Landlords are welcome to take advantage of our free Electronic Funds Transfer (EFT) Set-Up which allows direct deposit of rent payments. Please see our article on Page 1 and the insert!

Customer Name

Street Address

City, ST ZIP Code

To ensure your inquiry is promptly received and distributed, please make sure to include your Starbucks Store Number on all communication.

Your Store Number is

_______________________

IMPORTANT INFORMATION REGARDING YOUR 2010 BUDGET ADJUSTMENT AND YEAR-END RECONCILIATION

Starbucks Dispute Resolution Process

The FLA department pays all expenses per the terms of the Lease. Any modification of the Lease must be commemorated in a fully executed Amendment. If you dispute Starbucks calculation of a reconciliation or budget increase you must respond in writing to the Notice Address in the Lease. Emails, faxes or voicemails are not accepted in lieu of this formal notification. To expedite your letter of dispute please include:

(1) the specific objection to Starbucks calculation,

(2) the rationale or methodology supporting your objection,

(3) the relevant Lease section(s) on which you base your objection, and

(4) any documentation to support your position.

Per the Lease any dispute regarding Operating Expenses will be resolved in good faith within 45-60 days of formal notification.

In NO EVENT shall ANY notice be delivered to the Store.

HELPFUL HINT #1:

Address Requirements - Please be sure to include your Starbucks Store Number (e.g. #12345-State) when addressing all envelopes, correspondence, reconciliations and invoices in order to expedite payment. Find your specific store number on the back page of this newsletter.

[pic] ESCROW GUIDELINES

• In most instances monthly escrows must be annualized and calculated to show 1/12th of the amount due each month.

• Retroactive adjustments will automatically be made and annualized effective January 1, 2010 or as your Lease provides.

Monthly escrows must be broken down by OPERATING EXPENSES/CAM, INSURANCE, TAXES and, if applicable per the terms of your Lease, NON-CAPPED OPERATING EXPENSES (e.g. CAM/UTILITIES/TRASH). The breakdown may not be applicable to properties where we pay Insurance and Tax payments annually.

Starbucks is unable to pay an outstanding balance from a statement or ledger because we cannot determine how our prior payments were applied. As a result, if there is an outstanding balance on our account, other than an annual reconciliation, we need a detailed invoice containing the following:

• Starbucks Store #

• A unique invoice #

• Billed to Starbucks Coffee Company

• Expense type (e.g. HVAC, water, real estate tax)

• Detail of work performed (e.g. HVAC maintenance)

• Exact amount due for each expense

• Period of time during which each expense was incurred

• Appropriate backup for each expense (e.g. utility bill, tax bill, etc.)

• Mailed to legal Notice Address.

Starbucks Reconciliation Process

With over 7,000 North American locations you can imagine how many inquiries, invoices, reconciliations, and requests we receive. “Reconciliation Season” is one of our busiest times of the year. Between March and June alone we receive approximately 5,000 annual reconciliations. To ensure the prompt processing of your reconciliation we ask that you take time and read the “Reconciliation” clauses in your unique Lease with Starbucks. Your reconciliation can be delayed when the ongoing cap is misapplied or Lease clauses are interpreted incorrectly.

The majority of reconciliations that are disputed by Starbucks are due to:

• Misapplying the first year cap on Operating Expenses;

• Misapplying the ongoing cap on Operating Expenses;

• Incorrectly stating Starbucks pro-rata share;

• Miscalculating the management fee; and/or

• Understating or overstating annual escrows paid.

Visit Us On the Web!

leaseFAQ

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HELPFUL HINT #5:

Direct Bills - Please remember to bill Starbucks, as your Lease provides, for direct billed categories separately from your year-end reconciliations. This includes all separately metered utility expenses for our premises and one-off Repair and Maintenance expenses billed back to Starbucks at a 100% share.

Starbucks Coffee Company

MS-RE3 2401 Utah Ave S, Suite 800, Seattle WA 98134

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HELPFUL HINT #6:

Reconciling & Ownership Changes - Most leases require you to reconcile for the entire calendar year. You are responsible for obtaining all documentation of expenses from a previous owner and submitting the entire year of expenses to Starbucks with full credit for all escrows paid by Starbucks before you became the owner.

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