In: Categories » » Loans and mortgages » Lease Abstraction
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Lease abstraction is an essential component of due diligence for a multi-tenant commercial property. Lease terms often vary from tenant to tenant. Lease terms and options impact both the quantity and quality of rental income. Lease terms affect the quantity of rental income by adjustments made for factors such as rental rates and escalations. Lease terms affect the quality of rental income based upon factors such as the tenants rights to lease additional space at a predetermined price or to give backspace if they no longer need it. Lease abstraction is a tedious and time-consuming process, particularly for properties with numerous tenants. Each lease is often 20 to 100 pages in length. In many cases, the lease form varies from tenant to tenant depending on whether the tenant or the landlord originated the lease form and which of a series of owners executed the original lease. Multiple special terms can be included in various portions of the lease. These modifications can substantially impact cash flow and the value of the property. Following are some of the lease terms which should be considered when conducting a lease abstraction: Renewal rights; To obtain more information on O’Connor & Associates lease abstraction services, call us at 713-686-9955. The appraisal division of O’Connor & Associates is a national provider of commercial real estate appraisal services including cost segregation studies, commercial real estate appraisal, due diligence, business valuation, residential property appraisal, expert witness testimony, feasibility studies, financial modeling, highest and best use analyses, casualty loss valuation and HUD map market studies.
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