Category: Lease Administration

The Lease Abstraction Process & its Stakeholders

 

When getting your leases abstracted, you should consider the stakeholders who will be using the lease abstract information. This is important because only when you identify the stakeholders and each of their requirements, will you be able to create lease abstracts that capture all the data they need. 

When it comes to identifying the stakeholders and their requirements in terms of the lease data being abstracted, communication is the key. You need to find out who will be relying on the lease abstracts and for what purposes. Stakeholders can be found across your organization, in different teams including-

  • Operations
  • Accounting
  • Finance
  • IT
  • Legal

All of these teams will have an interest in the various different aspects of leases and you need to find out what they are and ensure that your lease abstracts cover those elements. Once you clearly identify all the stakeholders, the next step is to understand their requirements. What information will they need from the lease abstracts? The answer to this question will help you arrive at the key data points that are to be abstracted. 

At the time of finalizing the data points based on the various stakeholder’s requirements, you may come across various data capture requests. As a best practice, you can divide them into two different categories–one that lists the must-have data fields and another that lists those data fields which are good to have, along with reasons why. You can use this list to later finalize your lease abstract data elements. 

Bringing all the stakeholders onboard and understanding their needs before you start your lease abstraction project will ensure that your abstracts are comprehensive and don’t miss out any key information. Otherwise, you may miss out on critical data elements, requiring you to go back and get your lease abstracts updated by adding abstracts of those clauses later on.

Rebolease.com, powered by RE BackOffice, Inc., is a premier provider of lease abstraction, administration, audit and accounting services. Headquartered in Pittsburgh, PA, we are a global boutique firm, providing high-quality services to top-tier clients across industry verticals, covering every type of lease and on any lease platform. We are proud to be a  trusted partner, for 15+ years, to leading retailers, REITs, property owners/managers, and corporate accounts seeking a strategic advantage. All client projects are performed in-house.

Whether it is one clause, one amendment or a whole lease agreement, we can do it for you.

ICSC, ICSC 2021, REBACKOFFICE

Questions to ask in the pre-lease abstraction phase

 

Lease abstraction projects can be divided into 2 phases, namely, the pre-abstraction phase and the post-abstraction phase. The pre-abstraction phase is extremely important as it sets the tone for the rest of the project. The success of a lease abstraction project largely depends on the actions taken during the pre-abstraction phase. Our blog this week discusses a few questions that must be answered during the pre-abstraction phase in order to ensure the lease abstraction project is fruitful. 

Question #1: What are the different lease types?

Before starting your lease abstraction project, you need to consider the different lease types that you have. These include equipment leases, real estate leases including property and ground leases.  This is an important factor, because the information you capture and the lease abstract format will vary depending on the type of lease. 

Question #2: Where are the leases located?

Another factor to consider is the lease location. This question has two parts to it. First is in terms of lease documents storage and location. Questions to answer from this perspective are 

  • Do you have digital copies of the lease documents? 
  • Where are they stored and are they easily accessible? 
  • What is the quality of the documents in terms of readability?. 

The second part related to the location of the leased premises which may affect the actual language in which the leases are drafted and also the interpretation of clauses due to differences in lease/legal language from region to region. This is important because it impacts how you approach your lease abstraction process. As a best practice, when dealing with multilingual leases, it is generally more economical, efficient and even accurate when the lease abstract is created in English directly rather than abstracting in the local language and then translating the abstract to English. 

Question #3: How is the lease portfolio currently managed?

The next item to consider is the current situation of the lease portfolio. How is the lease portfolio currently managed and by whom? Do you have enough resources to stay on top of your lease portfolio and keep it updated, always? Do you have a well-staffed lease administration team or do you rely on a few lease administrators for management of your lease portfolio? In that case do you have a back-up if your lease administrator quit? These are some of the questions to be answered at this stage. Another factor to think about is whether you have a lease management system in place or are you relying on spreadsheets? While spreadsheets have their benefits, a dedicated lease platform can be a more effective tool for lease portfolio management. So, if you are having your leases abstracted, and are using spreadsheets, it might also be a good time to consider migrating to a lease administration platform that can help in lease management throughout the lease lifecycle.

Rebolease.com, powered by RE BackOffice, Inc., is a premier provider of lease abstraction, administration, audit and accounting services. Headquartered in Pittsburgh, PA, we are a global boutique firm, providing high-quality services to top-tier clients across industry verticals, covering every type of lease and on any lease platform. We are proud to be a trusted partner, for 15+ years, to leading retailers, REITs, property owners/managers, and corporate accounts seeking a strategic advantage. All client projects are performed in-house.

Whether it is one clause, one amendment or a whole lease agreement, we can do it for you. 

ICSC, ICSC 2021, REBACKOFFICE

Lease Abstracts: Know where you really stand

 

Lease abstracts are critical to effective lease portfolio management. Lease abstracts offer a summary of the key financial and non-financial elements of a lease thus allowing the landlord or tenant to have timely access to important lease data without having to pore through the entire lease and related documents. However, for lease abstracts to be really useful and serve their purpose, it is important that they are 

Accurate

The data in the lease abstracts should be 100% accurate and convey exactly what is stated in the lease document. There’s no room for interpretation or errors in this regard.

Comprehensive

Your lease abstract is a summary of important lease clauses–both financial and non-financial. It is essential that your lease abstract is comprehensive in the sense that it covers all the key terms and captures their essence completely. While there are a few clauses that always find their way into lease abstracts such as rent, renewal options, etc, there may be other clauses that may have to be captured depending on your needs or circumstances. For example, recently, when the COVID-19 pandemic struck, clauses such as Go-Dark, Co-tenancy, Anchor Tenant, Rent Abatement, etc., garnered a lot of importance. 

Not missing any critical dates

While this may seem obvious, it is surprising how many lease abstracts miss capturing something as critical as the commencement date. One of the reasons is, often leases are abstracted as soon as they are executed and the commencement date may not have been filled in the original lease document. Such abstracts must be revisited and updated. 

So, if you already have lease abstracts, it is time to take a good look at them and find out where you really stand in terms of their utility. Are your lease abstracts really serving their intended purpose? A lease audit can help you determine this and also identify the data lacunae and inaccuracies.

Partnering with a trusted lease abstraction service provider ensures your lease abstracts are 100% accurate, comprehensive, and complete with no missing data!

 

Rebolease.com, powered by RE BackOffice, Inc., is a premier provider of lease abstraction, administration, audit, and accounting services. Headquartered in Pittsburgh, PA, we are a global boutique firm, providing high-quality services to top-tier clients across industry verticals, covering every type of lease and on any lease platform. We are proud to be a trusted partner, for 15+ years, to leading retailers, REITs, property owners/managers, and corporate accounts seeking strategic advantage. All client projects are performed in-house.

Whether it is one clause, one amendment, or a whole lease agreement, we can do it for you. 

Combating attrition and resource shortage in Lease Administration effectively with a trusted Lease Administration Service provider

 

Staying on top of lease portfolio takes time and effort–consistently. It is not a one-time process, or something that you do, when time permits. At the same time, there are some aspects of lease portfolio management that demand a lot of time initially and then, only minimal investment of time, on an ad-hoc basis. Lease abstraction is one such element. You will need accurate and comprehensive abstracts of all the leases in the lease portfolio in order to manage your lease portfolio efficiently. However, once the lease abstracts are ready and entered into your lease administration software platform, they’ll most likely only need to be updated in the event of any amendment to the original lease agreement. But, there are other elements in the lease management process that require consistent attention, and this is where most organizations fall behind. 

Organizations are often short-staffed when it comes to lease administration due to numerous reasons, one of them being the high cost associated with the lease administration process as a whole. Lease administration resources are considerably expensive. Add to that the training and retaining costs that accumulate over time, the lease administration process in itself becomes costly. 

Secondly, the rate of attrition is extremely high in the lease administration sector which affects time-sensitive lease portfolio management tasks as a result of which organizations fall behind on tasks like invoicing, reconciliation, CAM audits, and other timely updates.,  

Outsourcing lease administration functions fully or even partly to a trusted lease administration company can help organizations stay on top of their lease portfolios and, at the same time, enjoy more cost-efficiency, scalability, and flexibility. Even organizations with in-house lease administrators can leverage the expertise and benefits that an outsourced lease administration vendor brings to the table. Some key benefits include-

  • The obvious reduction in training and HR-related expenses that are a part of a large in-house lease administration team
  • The flexibility to scale up or down their lease administration resources based on their lease administration needs

Partnering with a trusted lease administration service provider ensures you stay on track and don’t miss critical timelines due to resource constraints and have access to critical lease data that helps drive key strategic decisions in a timely manner.

Rebolease.com, powered by RE BackOffice, Inc., is a premier provider of lease abstraction, administration, audit, and accounting services. Headquartered in Pittsburgh, PA, we are a global boutique firm, providing high-quality services to top-tier clients across industry verticals, covering every type of lease and on any lease platform. We are proud to be a trusted partner, for 15+ years, to leading retailers, REITs, property owners/managers, and corporate accounts seeking strategic advantage. All client projects are performed in-house.

Whether it is one clause, one amendment, or a whole lease agreement, we can do it for you. Please contact us today to learn more.

Lease Administration post: Are you paying too much rent?

 

Rent is one of the key components of any lease. In fact, the rent roll is the core of any lease agreement. However, it can also be one of the most complicated elements. Sometimes, owing to its complexity, tenants may even end up paying more than what they owe. In this blog, we discuss what constitutes the key elements of the rent roll that tenants shouldn’t ignore. 

Rent per square feet

If your rent is calculated per square foot, you need to ensure that the base of this calculation is correct–which is the leased space or sometimes referred to as square footage. Sometimes, even a minute error in lease square footage calculation can make a vast difference in the final amount that is levied on the tenant. This is especially true when the base rent, CAM charges, and other operating expenses are calculated on a per-square-foot basis. Learn more in this blog post

Any rent-rise indicators 

If your rent hikes are pegged to any other economic indicators such as the Consumer Price Index (CPI), you need to ensure the data related to the indicator is accurate. Any changes resulting due to changes in the base price index need to be accounted for accurately and reflected in the rent roll. 

What about CAM?

In net leases, CAM charges constitute a considerable chunk of your rent roll. Verifying CAM charges and ensuring the amounts levied are accurate is complex due to the nature of CAM elements. CAM includes multiple headers and complicated computations that often leave room for interpretation and also increase the chances of miscalculations. You need to be aware of the various components of your CAM charges and how they are computed for you as per your lease. For example, 

  • What happens if you moved into a fairly empty building that’s only gradually filling up? 
  • How is the CAM divided among the existing tenants including you, until the time there’s 100% occupancy?
  • What will be the repercussions on your CAM charges as new tenants are signed up.

As a tenant, it is very important to ensure that you have a solid understanding of your rent structure and the various elements that constitute your rent roll. It is also essential that you track them, consistently to ensure there are no errors, as errors that are embedded in the lease, year, or year can cost you dearly even impacting your key real-estate-related business decisions.

Two things that can help you in this regard are

  1. Timely CAM audits by an experienced lease services provider who will scrutinize your invoices, CAM calculations, and other related charges levied by the landlord to identify any errors and have them rectified for you.
  2. Accurate lease abstracts that simplify complex lease terms for you without diluting their essence so you understand your rent roll and related components clearly. 

Rebolease.com, powered by RE BackOffice, Inc., is a premier provider of lease abstraction, administration, audit, and accounting services. Headquartered in Pittsburgh, PA, we are a global boutique firm, providing high-quality services to top-tier clients across industry verticals, covering every type of lease and on any lease platform. We are proud to be a trusted partner, for 15+ years, to leading retailers, REITs, property owners/managers, and corporate accounts seeking strategic advantage. All client projects are performed in-house

Whether it is one clause, one amendment, or a whole lease agreement, we can do it for you. Please contact us today to learn more.

CAM Reconciliation: Should you outsource it?

 

Outsourcing your CAM audit and reconciliation tasks to an expert lease administration company helps you in many ways. 

  1. It keeps your costs low: This is one of the major benefits of outsourcing your CAM audit and reconciliation. You save on HR and training costs that you would incur if you hired someone for lease accounting and lease administration in-house. 
  2. Expertise: When you outsource your CAM reconciliation to a lease administration company, you benefit from their expertise. A lease administration company has vast experience across multiple industry types which you can leverage. Your in-house lease administrator may not have that kind of exposure and expertise. 
  3. Easier negotiations: If there are any discrepancies in your CAM calculations, the lease administration company to which you have outsourced the CAM reconciliation work will be the one getting in touch with your landlord. In general, this scenario is better accepted by Landlords, as the lease administration company comes across as a more reliable, third-party than your own internal team when reaching out to your Landlord. Plus, lease administration companies specialize in this kind of communication and usually have a process or protocol which is generally well-received by the other party. 

 

Rebolease.com, powered by RE BackOffice, Inc., is a premier provider of lease abstraction, administration, audit, and accounting services. Headquartered in Pittsburgh, PA, we are a global boutique firm, providing high-quality services to top-tier clients across industry verticals, covering every type of lease and on any lease platform. We are proud to be a trusted partner, for 15+ years, to leading retailers, REITs, property owners/managers, and corporate accounts seeking strategic advantage. All client projects are performed in-house.

Whether it is one clause, one amendment, or a whole lease agreement, we can do it for you. Please contact us today to learn more.