Lease Abstracts

There is a lot to a lease that has an impact on value that must be considered on an on-going basis, not just at acquisition and disposition. For many owners […]

There is a lot to a lease that has an impact on value that must be considered on an on-going basis, not just at acquisition and disposition. For many owners items such as kick-out clauses and exclusives can be forgotten with important dates slipping by. This can happen to the most organized owners and even those with third party management in-place. There is no reason it needs to.


You buy a multi-tenant strip center with a drugstore, a take-out restaurant, and a liquor store. When you bought the property, there was an exclusion clause that the drugstore had against liquor stores but this was “grandfathered” in for the remaining term of the liquor store lease. The liquor store comes up for renewal, you renew them and go on your way. You then go to sell the property and the exclusion is discovered by the Buyer during due diligence. Their lender inquires about it, you attempt to get another exception with the drugstore, and the drugstore refuses. The drugstore also refuses to provide an estoppel and abates rent because you have defaulted on a lease provision. You now have an un-saleable property and a loss of cash flow at the very least. A check up on your leases can help you avoid these costly mistakes.

CASE STUDY FOR A LEASE ABSTRACT (Assignment and Subletting):

In recent years there has been a large increase in sale/leasebacks by franchisees of restaurants and other free standing retail real estate. Most leases provide for the ability of the tenant to assign the lease or sublet the property. Hopefully the lease states that upon assignment or sublet to a new tenant, the existing tenant is not relieved of any of its obligations. However the surge in sale/leasebacks from 2003-2007 flooded the market with custom leases that were drawn up and agreed to by franchisees and new owners. Some of these leases gave the ability of the franchisee to assign their lease to a different operator and actually be relieved of any further obligations. This is a default waiting to happen if the assignment goes to an inferior operator or franchisee of lesser quality. From a valuation standpoint this can be the difference between owning an 8% cap deal and a 10% cap deal. Make sure your leases have some “residual teeth” on the matter of assignment and subletting.

What we do:

- Abstract the lease to your desired level of detail. We have up to 60 different lease details we look at.
- We abstract with a focus on valuation consequences, not from a legal standpoint. We are not attorneys. For legal interpretation of your leases please contact your attorney
- We can make recommendations going forward depending on your stated strategy

At your choice we can then take the next step and create a cash flow model to estimate value.

Our lease abstracting services are priced at $75 for a “financial” abstract, $150 per lease for a full abstract, or $250 each for GSA leases. For 50 or more leases, contact us for pricing.

Reach our Lease Abstracting team at

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