Lease Abstraction post: Lease Abstract Template Definitions

What to extract? How to Extract? Why to Extract?

Your lease abstract template is the backbone of your abstraction project, simplifying the complexity of your lease documents and scaling to manage the volume of leases in your lease portfolio. You need to ensure that your abstraction template captures all the relevant information. While some core fields such as rent, options, key dates, etc., are needed irrespective of what industry you belong to, there may be fields that are important for your business or industry in particular. Apart from such fields, there may be certain, less common clauses in some leases that must be captured.

So, the first step to ensuring you are capturing the right data is

Being able to identify what data matters to you
Having a template that caters to your needs by capturing that information

You can do this by defining the lease abstraction template objectives clearly.

Defining the lease abstraction template objectives

Lease abstraction objectives can be broadly categorized into four categories.

Financial

This involves tracking and optimizing every aspect of the company’s portfolio of leased assets that will add value to the entire leased portfolio and can also make a huge impact on the outcome of the financial report. Examples include rent and other payment obligations, Security Deposit, Tenant Improvement allowance, etc,.

Operational

This involves tracking critical lease dates and highlighting potential liabilities, which, if missed could result in serious financial implications to a company’s bottom line. For example, missing notice period, renewal options, last date of rent payment, etc., or, not understanding or accruing a potential lease liability and its obligations such as using the premises for the sale of goods or services not permitted in the lease.

Compliance

Whenever there’s a change in regulatory requirements that impacts how your leases and the components therein are shown in the books of accounts, it will result in some changes in your lease abstracts. The most recent example is the FASB/IASB regulations that categorized the leases as operating leases, capital leases, leases with a right to purchase, etc., thus bringing about changes in the way they are accounted for, in effect, requiring the lease abstracts to be restructured to comply with them.

Emergencies

The COVID-19 Pandemic or Future COVID-like challenges

The COVID-19 pandemic brought to light the need to explore various clauses, which were otherwise, probably not considered important to be included in lease abstracts. An example is when, during the peak of the pandemic a lot of tenants, especially in the retail industry, had to act swiftly to exercise the options in their leases that offered them some respite as their finances hit rock-bottom due to lockdowns and shelter-in-place restrictions brought on by the pandemic. Examples include exercising the Force Majeure clause that may allow the tenant to terminate the lease before the end of the term or allow for rent abatements or suspension in exigencies such as the pandemic.

For your lease abstracts to be accurate and truly serve their purpose, the template has to reflect all information that is relevant to you. This is where a lease abstraction partner with expertise, experience, in-depth knowledge, and perspective of the process can add value by streamlining your lease abstraction process and designing optimal lease abstraction templates.

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.

Amendment Abstraction: Why is it Important?

Keeping your lease portfolio updated is not a one-time process. It entails updating your lease abstracts with the information in newly executed amendments, abatements, or deferral clauses.

Learn more in this video

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.

Mind your language: The challenges and nuances of multilingual lease abstraction

Retail leases are one of the most complex lease types. They are vast, have very specific clauses which are often not seen in other lease types (percentage rent and right to audit are some examples), and more often than not, retail businesses have multiple locations. The complexities of retail lease abstraction increase if the leases span across different geographical locations.

If you are a retailer with a lease portfolio that extends beyond the US borders, you also need to consider your lease abstraction team’s/vendor’s capabilities in terms of language translation. Global lease abstraction projects require robust language translation capabilities and the ability to understand the various regional nuances. For example, not all English leases are the same. There will be differences in the language and their interpretation from region to region, such as between the US and UK. So, while the language is the same (English), regional nuances and knowledge of the legal terminologies pertinent to the country come into play when abstracting the lease.

Also, when approaching multilingual leases, it is generally more economical to abstract the lease in English directly rather than abstracting in the local language and then translating the abstract to English. This is because the cost of translation of the entire lease will be much higher due to the sheer volume of information. Sometimes, it may be tempting to rely on online translation tools as prima-facie they may seem like an economical choice, but they bring along with them, concerns about data security and breach of confidentiality.

It makes sense to partner with a trusted and experienced, global retail lease abstraction service provider to get your multilingual retail leases abstracted. Such a vendor will be able to bring some degree of standardization and uniformity to your multi-location, multilingual leases, even if they vary owing to their geographical locations.

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.

Getting started with your Lease Abstraction Project? Here’s what you need to know.

You rely on your lease abstracts to make the right business decisions and to stay on top of deadlines and due dates pertaining to your lease agreements. This makes lease abstraction one of the most important processes when it comes to your lease portfolio management. In this blog, we discuss a few things you should consider before you get started with your lease abstraction project.

Know what you are up against

Don’t overburden your team members by underestimating the incremental workload or ignoring knowledge gaps and lack of experience. Thrusting your lease abstraction project on your team without a clear understanding of what is required of them and whether they have the necessary knowledge, experience, time, and skill-sets to accomplish the goal will result in botched up, inaccurate lease abstracts that will serve no purpose and perhaps even negatively impact your ability to make the right business decisions.

Leverage technology wherever possible

When we think of lease abstracts, probably the first image that comes to mind is of a lease analyst scrutinizing your lease contracts. But, did you know that the initial perusal can now be efficiently done by deploying Ai tools? With the foray of Ai into lease abstraction, landlords and tenants alike are leveraging technology to streamline many of the processes involved in lease abstraction. It is cost-effective and also more efficient in terms of time.

Involve parties that can add value

Apart from leveraging technology, you should also consider involving 3rd parties who can add value to your lease portfolio management process and to your lease abstraction project in particular. This includes lease consultants, lease software vendors, and lease service providers who specialize in various aspects of lease portfolio management such as lease abstraction, lease administration, lease accounting, lease audit, etc. Such entities can bring value to the table for you, right from the start, including Ai technology and the expertise to help you navigate the complexities of the lease abstraction process from day one.

Having an experienced lease abstraction partner even as you embark on your lease abstraction journey can help you avoid common mistakes, unforeseen pitfalls, and missed opportunities that you may find difficult or costly to rectify at a future stage.

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 Abstraction post: When to get your leases abstracted? (The answer is not what you think)

You know that you need to get your leases abstracted as soon as you sign them so that you have instant and easy access to the key information therein. But, did you know that it is not the only time? To stay on top of your lease portfolio, you have to ensure your lease abstracts capture the most recent information at any time. This means you need to update your lease abstracts at various points in time. These include-

Mergers & Acquisitions

When there’s a merger or acquisition, you need to get the new leases abstracted and their lease abstracts included in your lease portfolio. Even if the newly acquired leases have their abstracts, you may have to get them abstracted to match your standard format. For example, the existing abstracts may not have covered certain fields. Plus, there may be changes in parties to the lease due to the merger/acquisition and that will have to be reflected in the abstracts as well. (Learn how we assisted America’s Largest Provider of shared Wireless Infrastructure manage their active Tower Agreements better after a Merger)

Amendments or addendums

Over the years, there are bound to be updates and changes (amendments and addendums) to your existing leases that need to be carefully reviewed and captured in your lease abstracts. The COVID-19 pandemic last year was a case in point. Retail tenants had to quickly explore the options in their leases that offered them some respite from the financial damages caused as a result of the pandemic and pandemic-induced lockdowns. Learn more about the importance of amendment abstraction in this blog post.

Regulatory requirements

Another time when you may have to revisit your leases and lease abstracts is when there are regulatory changes that affect your leases. A recent example of such an event is the FASB/IASB compliance requirements, including the FASB ASC 842. This blog post tells you more about why you need to take a second look at your lease abstracts from the FASB perspective.

Tech changes

Sometimes changes in technology could require you to revisit your leases. For example, migration from spreadsheets to a robust lease administration platform, or even from an existing lease administration platform to another.

The events we discussed above could be termed as catalyst events that trigger lease abstract updates. The goal is to ensure that you leverage such catalyst events to benefit your entire organization and to optimize your lease portfolio management process.

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.

Defining the scope of your Lease abstraction project

Managing your lease abstract project efficiently, effectively and accurately, calls for thorough preparation across various spectrums. One of the first things to consider is the scope of your lease abstraction project.

Before you embark on a lease abstraction project, you should determine the scope of the project. At this stage, you need to have clear answers to questions like-

What is it that you wish to cover in the lease abstract
What information do you wish to capture
What is the extent to which you want to capture the data points

Answering these questions will be easier and more objective if you consider the stakeholders involved and their goals. For example, figure out who all will be relying on your lease abstracts and for what purposes. Most likely, your operations, accounting, finance, IT, and legal teams will have an interest in various different aspects of your leases. Communication is the key at this stage. Once you zero in on the stakeholders, the next step is to identify 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.

Make sure you bring subject-matter-experts (SMEs) on board at this point too, as they can help you make the most of the data you find in your lease by identifying what information will come in handy even at later stages of the lease lifecycle.

The next step is to finalize the team that will be involved in the lease abstraction project and the project timeline. At this point, it is essential that you don’t let resource constraints or lease data volume impact your lease abstraction project timeline negatively. The goal should be to ensure that your lease abstracts are ready within the stipulated time frame so you don’t swerve from the path of attaining your business goals.

The successful completion of a lease abstraction project entails managing its various elements effectively, which can be a strain on your resources and time. We can help you through every step of your lease abstraction project, right from lease abstract template design to ongoing lease updates and administration.

Rebolease.com, powered by RE BackOffice, Inc., is a premier provider of lease abstraction, administration, 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. Please contact us today to learn more.