Editor’s note: this is an article summarizing the content of a lease abstraction webinar series. To access the full webinars, visit NRTA’s Professional Library.
Kelly Kepley, Vice President of Lease Services at CoStar Real Estate Manager, is considered a subject matter expert on lease abstraction and has a long history of hosting NRTA presentations on the topic. In a recent two-part webinar series, she discussed the best practices for both collecting quality data and maintaining it in the future. The series is an excellent resource for a small business owner hoping to understand what makes the practice so critical.
In Lease Abstraction: Part 1, Kepley outlines how the practice of reading and analyzing a lease provides crucial information for making business decisions in the future. It allows you to manage critical dates and lease events, have easy access to information, analyze your business’s portfolio, and prepare for financial and corperate reporting. All of these benefits tie into creating a strategic plan for your business. Of course, lease abstracting has its challenges. Leases are complex, packed full of dates, and rarely follow a standardized format. There may be other issues, such as translation errors in international leases or other complicating factors.
To help break down the process, Kepley provided some best practices for anyone completing a lease abstraction. She gave examples of effective tools and documentation, as well as samples of legal documents she had personally encountered in her own work. In general, she described a few key questions required for any abstraction form:
- What data is critical to abstract?
- Who will use this information?
- What reports will be required by the people utilizing this information?
And, the big question:
- What can be maintained consistently, and who will maintain it?
The last question ties into part two, which outlined how to maintain the collected data. Gathering the data is essential, but ensuring that it remains factually correct and up-to-date is just as important. Kepley highlighted the importance of having real-time data prepared and organized for your business. It also reduces the risk of any errors, as it will be reviewed multiple times in the process.
Here are the steps Kepley suggested:
- Review every field for data accuracy, best practices conformity, and spelling. Read every document, including supplemental documents and abstracts.
- Document that every field has been reviewed and accurately populated.
- Submit the lease abstract for review.
- If there are no corrections and the lease abstract is approved, store the document for easy access.
- If corrections are required, return to an analyst for corrections and a second review.
- Repeat until the lease abstract is approved.