Most people know that they need to get their leases abstracted as soon as they sign them so that they have instant and easy access to the key information therein. But, did you know that it is not the only time?
To stay on top of your lease portfolio, you have to ensure your lease abstracts capture the most recent information at any time. This means you need to update your lease abstracts at various points, including these four key times:
1. Mergers & Acquisitions
When there’s a merger or acquisition, you need to get the new leases abstracted and their lease abstracts included in your lease portfolio. Even if the newly acquired leases have their abstracts, you may have to get them abstracted to match your standard format. For example, the existing abstracts may not have covered certain fields. Plus, there may be changes in parties to the lease due to the merger/acquisition, which will also have to be reflected in the abstracts.
2. Amendments or Addenda
Over the years, there are bound to be updates and changes (amendments and addenda) to your existing leases that need to be carefully reviewed and captured in your lease abstracts. The COVID-19 pandemic was a case in point. Retail tenants had to quickly explore the options in their leases that offered them some respite from the financial damages caused as a result of the pandemic and pandemic-induced lockdowns. Learn more about the importance of amendment abstraction here.
3. Regulatory Requirements
Another time when you may have to revisit your leases and lease abstracts is when there are regulatory changes that affect your leases. A recent example of such an event is the FASB/IASB compliance requirements, including the FASB ASC 842. This blog post tells you more about why you need to take a second look at your lease abstracts from the FASB perspective.
4. Tech Changes
Sometimes changes in technology could require you to revisit your leases. For example, migration from spreadsheets to a robust lease administration platform or from an existing lease administration platform to another.
Overall, the events we discussed above could be termed catalyst events that trigger lease abstract updates. The goal is to ensure that you leverage such catalyst events to benefit your entire organization and to optimize your lease portfolio management process. If you are just starting your lease abstraction process, here are the 4 key benefits of outsourcing your lease abstraction process to a trusted provider. To learn more about what you should consider when assessing your lease abstraction vendor’s experience, click here.
