All about Lease Abstraction Services and Their Importance

When it comes to multi-tenant commercial property, the term lease abstraction is considered as most important aspect under due diligence. The terms under lease vary from holder to holder. Usually, there are various important aspects come in lease abstraction process such as read the agreement, summarizing an issue as well as search for all the important components essential for completing the cash flow analysis. All the terms & conditions of an agreement have a great effect on both quality and quantity of the rental income. The services of lease abstraction include both the agreement terms and & conditions and analysis of their effects. The process of special requirement analysis includes a detailed study of numerous interconnected issues.

The changes required after analysis can remarkably make the cash flow and property value go forward. There are special provisions also introduced that determines and simplify the requirements of the subject holder. These provisions with required capability include renewal options, termination options, etc. These provide anxiety or unfavorable cash flow in lots of cases. When conducting lease abstraction services, one should keep in mind some of these given terms of agreement-

• Renewal rights
• Provisions for Escalation
• Electric prices for after-hours
• Provisions regarding Co-tenancy (a case where holder B leaves the center and holder A recess the lease)
• Rights regarding parking and pricing
• Signature rights
• If needed rights regarding reduction in rent

Importance of Lease Abstraction Services

Lease abstraction is nothing but precise summery regarding major business information when it comes to commercial real estate lease. Under services, the agreement of commercial lease includes long wordy paragraphs written in complex legal languages and abstracts. Following major terms a lease agreement includes-

• Holder’s Name
• Landlord’s name
• Lease terms
• Costs of square footage leased
• Space Number
• Base Rent
• Percentage Rent
• Document list required for modification in lease terms

The lease abstraction services are ideal for financial purposes like when you are looking for purchasing a commercial property, you must work with due diligence. Main requirement of due diligence is a potential buyer must check all the aspects of the commercial property such as the lease status related to the property. Furthermore, the lease abstraction review makes the due diligence task more efficient in terms of both time and cost. Therefore the services are powerful and efficient to help the administrator and professional to audit a lease at the time of its terms.

The term lease abstraction is considered as direct proportional to the enhanced transitions complexity of commercial properties. The services of lease abstraction need lots of data and information that is critical for valuation purposes.