Aug 10, 2015

5 Tips for Commercial Lease Abstraction

By Don Catalano



Lease abstraction is one of the keys to making your company's commercial real estate portfolio manageable. Your abstracts turn 10 to 100-plus page leases of many different forms into a straightforward set of easily readable consistent documents. In addition to being easier for you to read, abstracts also provide the information you need to enter your portfolio information into real estate optimization or workplace management software. If you don't already have abstracts, here are some tips to get you started on the lease abstraction process.

1) Lease Abstraction Is For Experts

If you miss a notification date or default on your lease because you were following an abstract that had a mistake, your landlord is unlikely to show you leniency. To truly be able to use your abstract, it has to be 100 percent correct. If you do not have a team of experienced abstractors on your staff, consider farming the work out to an outside firm. Attorneys, brokers and professional abstractors all have extensive experience in reading and summarizing leases. Some even carry errors and omissions insurance that can protect you if you are harmed by a mistake in the abstract that your vendors provide for you.


2) Be Consistent

Before starting to abstract leases, take the time to develop a format that will always work for you. If you do not have a consistent format, you will lose one of the key benefits of lease abstraction -- having a document in which you always know where to look.


3) Keep Abstracts Short

When you create your abstracts, you have to walk a fine line. If the abstract is too short, it might not have the information you need to be truly useful. On the other hand, if it is too detailed, you could end up with documents that are almost as unwieldy as the original leases. Typically, two or three pages per abstract should be give you enough detail to be able to use the abstract most of the time.


4) Abstract Your Abstract

When you design your abstract, try to lay it out in a way that makes it easy to scan. For instance, your lease probably defines how your CPI-based rent escalations are calculated. Your abstract should say that rent escalations are based on the CPI with a 2 percent annual cap. However, you should probably put the base rent rate in larger print or on its own line in your abstract. In general, if you design your abstract to be scannable, it will save you more time.


5) Remember the Original Document

Finally, remember that just because you've gone through the lease abstraction process doesn't mean that you won't ever need your leases. Consider placing references in your abstract that make it easy to see where each abstracted item comes from in the original lease. This lets you get additional detail when you need it without having to reread the entire document. Also, when you finish doing your abstracts, put your leases into order and into folders. If possible, digitize them to your server. Either way, they will be easier to use and less likely to end up being lost.


Other great Commercial Lease articles:

Protecting Yourself from Signing the Wrong Office Lease

Strategies for Commercial Lease Abstraction

Commercial Tenants Guide to Office Leases

Importance of Commercial Lease Abstraction



Subscribe Now

Topics: Commercial Lease Abstraction

Office Space Calculator Use Now
10 Steps to Cutting  Your CRE Expenses Download
Improve EBITDA by Cutting Your RE Costs Download


Don Catalano