Rpcon masterclass s203-essentials-lease-abstracting - julie ricci

Lease Administration Masterclass Friday, 23rd March 2012

Essentials of Lease Abstracting

Presented by: Julie Ricci

Lease Administration Masterclass Friday, 23rd March 2012Lease Administration Masterclass Friday, 23rd March 2012


Session Overview• What is a Lease Abstract?• What is the Value of Lease Abstracting?• Basic Rules Before You Start• Administering Multi-Geographic Portfolios• Systems & Tools• Lease Abstraction Components



What is a Lease Abstract?leaseNoun1. a contract renting land, buildings, etc., to another; a contract or instrument conveying

property to another for a specified period or for a period determinable at the will of either lessor or lessee in consideration of rent or other compensation.

2. the property leased.

3. the period of time for which a lease is made: a five-year lease.

ab·stractNoun4. a summary of a text, scientific article, document, speech, etc.; epitome.

5. something that concentrates in itself the essential qualities of anything moreextensive or more general, or of several things; essence.

“A summary of a contract for renting land or a building”

http://dictionary.reference.com/browse/will

http://dictionary.reference.com/browse/lessor

http://dictionary.reference.com/browse/lessee

http://dictionary.reference.com/browse/compensation

http://dictionary.reference.com/browse/which



What is the value of Lease Abstracting?To ensure ….

• Key Dates are checked and recorded• Charges are calculated correctly• Documentation of Key Clauses• Budgeting awareness for forthcoming expenses• Reduction of risk of unusual Clauses being interpreted incorrectly• Easy reference for Company personnel• Speed and ease of access• Use of automated Systems



Basic Rules Before You Start• Have a clear mind;• Take your time, check each page;• Don’t ever assume documents are the same;• Ensure you have a complete set of Documents including all

variations, extensions, memorandums, etc;• Review ALL documents before you start;• Seek guidance if you do not understand the intention of the clause;• Document data clearly and securely.

Tip of the DayTwo monitors are a must for efficient Lease Extracting.



Administering Multi-Geographic Portfolios

Are you about to expand your Business into another Country?

Well here’s your first challenge, not all Leases have a Lease Schedule.

Dealing with different area and rental calculations

Dealing with different currencies



Systems & Tools

How do you record your findings:

• Excel Spreadsheet– Pros and Cons

• Database– Pros and Cons



Lease Abstraction Components• Abstracting Critical Dates• Managing Rents, Reviews & Adjustments• Percentage Rent Calculations• Conditional and Dependant Charges• Sales Restrictions• Insurances and Compliance• Lease Conditions and Clauses• Exercising Options• Landlord and Tenant Notices• Outgoings Charges & Reconciliations



Abstracting Critical Dates• Start & Expiry Dates

• Mid-term Refurbishment

• Kick-outs

• Co-Tenancy

• Variable Accounting Years/Periods



Managing Rents, Reviews & Adjustments

• Calculating Commencing Rental

• What is a Review, Escalation and Step

• Cross-checking CPI values

• Managing Rebates and Rent Concessions

• Outgoings Adjustments



Percentage Rent Calculations• Calculating the threshold

– Natural – Forced

• Using the correct Accounting Period– Lease Anniversary– Financial Year– Calendar Year– Other

• Reporting Sales - Are there any exclusions?



Conditional and Dependant Clauses

• Greater Than

• Percentage of Sales

• Merchant Promotional Funds



Sales Restrictions

• Managing Restrictions

• Limiting other competitors

• Radius Restrictions



Insurances and Compliance

• Building Approvals– Warranty of Fit (NZ)

• Public Liability – Do you have the right level of cover

• Lessor Requirements– What does this cover;– Does the Lessor need to be noted on the Policy– Are there any exclusions

• Providing COC to Lessor– Is it a requirement under the Lease to provide each year?



Lease Conditions and Clauses

• What is a Kick-out Clause?– Landlord or Tenant Driven

• Accounting for Make Good Provisions

• Co-Tenancy Provisions

• Assignment Provisions

• Repairs & Maintenance

• Relocation

• Redevelopment



Exercising Options• What is a Right of Renewal?

• Have you documented:– First Exercise Date– Last Exercise Date

• What is the Review Method at the Option– Market– Fixed– CPI– Capped



Landlord & Tenant Notices

• Address for Service

• Format/Type

• Date deemed served

• Updated – Current

• Nominated Contact



Outgoings Charges & Reconciliations

• What is included as an Outgoing?

• Are you in the US? What are CAMS?

• Budget v Reconciliation



Thank you

Rpcon masterclass s203-essentials-lease-abstracting - julie ricci

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