The Lease Data an Abstract Should Include

When it comes to leasing software, most of the emphasis is on handling and manipulating large amounts of specific lease data.

But one of the most important pieces of information your leasing software has to handle and present is simple—the lease abstract. It may seem like an afterthought, but there are many ways you can use it to enhance your lease portfolio.

So let’s review. To start, we’ll cover what’s included, and we’ll also tell you why it’s there and why it’s important. When we’re done you’ll come away with a full understanding of how lease abstracts work, and how they can serve you as you manage your leasing portfolio.

The Info that Should Be in a Lease Abstract

With all of that in mind, let’s nail down exactly what needs to be in your lease abstract. Most of it is fairly basic, and a good leasing software package will help you add to the abstract in ways that can make it even more useful.

If you’re using your lease abstract it for management, underwriting, a merger, or an acquisition, it will have lots of important details on top of the basics.

To see how all this works, let’s take the real-life example of a real estate lease. It will contain the names of the landlord and the tenant and the terms and expiration dates of the lease, along with the renewal options and information about whether those were previously exercised by a tenant.

Ideally, it will also include information about the space being rented. Typically this will be expressed as a combination of the address and square footage of the space, but obviously the lease abstract for a commercial lease will be far more thorough and detailed.

Many of the basic financial numbers will be in the abstract, too. Think base rent, planned escalations, taxes, and sublet options for starters, along with a listing of additional sources of revenue connected to the lease (e.g., parking spaces, part time commercial usage, etc.)

Those numbers should be concise, cogent, and easy to understand, and a good lease software package will allow you to make sure that’s the case.

Finally, some of the legal rights pertaining to the will also be covered in the abstract, although not down to the last letter, obviously.

For example the abstract might show information about the right of first refusal if the owner sells the property, or whether the tenant has the right to lease another space in the property being rented under different circumstances.

Commercial Retail Leases

The lease abstracts for commercial leases are obviously different, especially when the space is used for retail purposes.

If this is the case, the geographical uses of the lease may be spelled out when it comes to the arrangement of different store spaces.

The abstract may also contain things like competition clauses, restrictions on neighboring retail spaces, exclusivity agreements, and so on.

Finally, you may also see lease elements like the required hours on the abstract, together with gross sales and the percentage of revenue the landlord may be allowed to receive as part of the rent.

There may also be co-tenancy clauses that give tenants the ability to reduce the rent if key tenants or a specified number of tenants vacate the retail property.

Equipment Lease Abstracts

The abstracts for leased equipment are just as important, and perhaps even more critical for certain types of businesses. Typically, they’re among the most poorly managed assets in a company’s financial portfolio, despite their size and value.

As a result, many CFOs have no idea how much equipment they actually own versus how much they lease, where that equipment is located, and what the start and end dates are for all of their equipment leases.

A good lease abstract can straighten out that kind of situation quickly, and indeed, it’s often the first step in cleaning up that kind of equipment-related mess. pertaining to equipment can often be the first step in cleaning up that kind of mess.

Using today’s leasing software, CFOs and managers can set up a simple lease abstract template that allows them to fill in the blanks for the equipment they have.

They can follow most of the same informational guidelines they use for real estate when it comes to covering the basics. In addition, a versatile account leasing package will allow them to customize the abstract and use it to subdivide the different equipment types into more manageable categories.

There are more benefits as well. Once that information has been set up, entered and organized, the least abstract data for both equipment and real estate can be shared across multiple departments.

That data sharing nearly always results in better, more informed business decisions, so it’s easy to see how that simple lease abstract can be a vital tool in how you manage your lease portfolio and your business as a whole.