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What is a lease abstract?

A lease abstract is a summary of key financial, business and legal information in a commercial real estate lease. A lease abstract should bring to the reader’s attention any unusual lease provisions, financial obligations or other issues of import.

The key to a valuable lease abstract is to keep things short and simple. However, each abstract will vary in length and detail depending on the particular needs of each client. An abstract is like a "road map" to a document, providing a summary of selected lease information and directing the reader where to obtain further information. see sample.

What is the purpose of a lease abstract?
  1. A lease abstract provides a lease summary together with referenced section headings so that all critical lease information is readily accessible.
  2. Lease abstracting becomes particularly important prior to an acquisition, merger, assignment or disposition.
  3. Lease abstracting organizes your lease data, which is a crucial benefit for leases with many amendments and for Landlords or Tenants with sizeable lease assets.
  4. This "road map" of the lease allows a lease administrator, leasing agent, property or maintenance manager to frequently review referenced lease information without taking time to search through each page of a lease, and any amendments or other modifications, to find the required information.
  5. Lease abstracting aggregates critical lease information, such as expiration and option notice dates, to better manage a portfolio of leases. This is particularly important when dealing with a variety of lease formats.
What lease information should be abstracted and how long should anabstract be?

This depends on the individual needs of each client and is contingent on several factors, including the reasons for abstracting and the length and complexity of the lease documents. Lease abstracts tend to range from two to ten pages per lease.

At a minimum, an abstract should contain the most important "dates and dollars" provisions of the lease such as Commencement, Expiration, Renewal Term and Renewal Notice and other key Option Dates along with Rents, Operating Expenses and Square Footages in connection with the timing and amounts of rent due under the lease. While many software accounting programs allow tracking of rent related dates such as increases and expirations, they often fall short on addressing critical dates such as renewal notices, right of first offer or refusals, etc.

When should a lease be abstracted?

Generally, an abstract should be done when a new fully executed lease is received or when a lease is modified in some respect.

Lease abstracts are normally required as part of the due diligence process prior to the acquisition of lease assets or prior to the merger or acquisition of a company that has a portfolio of lease assets

Leases are often abstracted "en masse" when a user acquires or contemplates acquiring a portfolio of leases, a property changes current management or converts to a new property management software system. Sometimes, existing lease data which has been deemed as credible can be verified or enhanced with other pertinent lease information not previously abstracted.
 
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