Taking a second look at your Lease Abstracts from the ASC 842 Compliance Perspective

 

The ASC 842 regulations bring a lot of changes to the way leases are treated in financial statements and books of accounts. In this blog, we outline the key challenges businesses face when embarking on their FASB compliance journey. 

Scope of work

While businesses know compliance with the updated FASB regulations entails having to reassess their books of accounts, many tend to underestimate the scope of work. There is a feeling that they have all the data they need and it is just a matter of restructuring it to suit the ASC 842 regulations. However, the ASC 842 regulations require a lot more than just data restructuring and the compliance process is much more time-consuming and labor-intensive than accounted for. As companies get started with the compliance process, they realize that they were mistaken. A lot of them struggle with data in complex spreadsheets that make it difficult to make sense of the vast amount of information contained therein. 

Inaccurate or outdated lease abstracts

Even businesses that have lease management systems in place find that sometimes they are not on top of their lease portfolios and the information in their lease abstracts is outdated and virtually useless. Also, the FASB regulations have brought about changes to the typical lease abstract templates by adding to the data points, making it necessary to include new information to the existing lease abstracts. These data points sometimes do not even exist in the original lease. They may be in the form of email communication, side letters, and other correspondence, which may have not been considered at the time or original abstraction.

Expertise

As discussed above, making your lease abstracts meaningful from the FASB compliance perspective entails a significant lease abstraction template redefinition–something that only an experienced lease abstraction vendor, with in-depth knowledge, perspective, and expertise into the lease abstraction process will be able to offer. 

Scaling to meet the timeline

The FASB compliance process comes with a definite timeline that needs to be adhered to. Also, after you get your leases in order and update your lease abstracts to reflect the information you need for your books of accounts, you should still consistently audit and update your lease abstracts at regular intervals to ensure you stay compliant. 

Bringing a trusted lease abstraction services provider on board can help you mitigate all these challenges effectively, efficiently, and meet your compliance requirements on time. 

Rebolease.com, powered by RE BackOffice, Inc., is a premier provider of lease abstraction, administration, and accounting services. Headquartered in Pittsburgh, PA, we are a global boutique firm, providing high-quality services to top-tier clients across industry verticals, covering every type of lease and on any lease platform. We are proud to be a trusted partner, for 15+ years, to leading retailers, REITs, property owners/managers, and corporate accounts seeking a strategic advantage. All client projects are performed in-house. Please contact us today to learn more.  

How Lease Administration can help you make the right decisions and enjoy significant cost savings

 

Consistent lease administration can help you stay on top of your lease portfolio and make the right business decisions. This is especially true at the time of renewals. Lease administration helps you stay up-to-date in terms of key lease terms and dates. If you don’t have a consistent lease administration process in place, you may be caught off guard as your lease becomes due for renewal and you will have no choice but to renew your lease on the Landlord’s terms and conditions, in the interest of time. 

On the other hand, if you have a solid lease administration process, you will be alerted to critical dates and clauses consistently and that will give you ample time to weigh your options and make the right business decisions. For example, you can plan a few months or even years ahead of lease expiration and enter into negotiations or amendments with your landlord. Being aware of your lease expiration dates well in advance also allows you to scope the real estate market for better options. Apart from helping you make the right renewal decisions, consistent lease administration also helps you stay on top of things when it comes to expansions. It draws your attention to the various rights you have in the event property in your premises becomes vacant. For example, the right of first refusal or the right of the first offer, etc. 

Lease administration also helps you avoid penalties and other charges by keeping tabs on upcoming rental obligations. Similarly, it also ensures any other invoices raised by the landlord are accurate and paid off on time. From the CAM and operating expense perspective, a lease administration process that involves reconciliation of account payables and receivables and auditing, thus ensuring you are not being overcharged. When you have a lease portfolio that runs into hundreds of leases or more, these figures can translate into significant cost savings.

Here’s a case study that discusses how America’s leading mid-sized retailers of the largest communication brands save more than $140,000 annually with effective and efficient Lease Administration services.

Rebolease.com, powered by RE BackOffice, Inc., is a premier provider of lease abstraction, administration, and accounting services. Headquartered in Pittsburgh, PA, we are a global boutique firm, providing high-quality services to top-tier clients across industry verticals, covering every type of lease and on any lease platform. We are proud to be a trusted partner, for 15+ years, to leading retailers, REITs, property owners/managers, and corporate accounts seeking strategic advantage. All client projects are performed in-house. Please contact us today to learn more.

Criteria for selecting the lease abstraction firm that’s right for you

 

Outsourcing your lease abstraction project is a big business decision and you want to make sure you do it right. In our blog this week, we discuss a few key criteria that you should consider when hiring a lease abstraction vendor.

Experience

This is one of the most important considerations because a lease abstraction firm that’s backed by years of experience will most likely be fulfilling the other criteria that follow. But, apart from the number of years the lease abstraction vendor has been in the business, also consider their experience in working with tenants and landlords. This angle is important because leases are complex legal documents and a lease abstraction vendor who has experience working with lessors and lessees over the years has a much broader perspective than someone who has been typically involved only with one of them. Another factor to consider is their experience with leases of your industry.

(Learn more about this criteria in our blog, What to consider when assessing your lease abstraction vendor’s experience?

References

Ask your lease abstraction vendor for references. No matter how big or small, always ask them to provide you with client references. Reaching out to their former/current clients will provide you with the insight you need to make a decision. It will also shed light on their ties with clients and the quality of their client services process. 

Expertise

You know how important it is to maintain 100% accuracy when it comes to lease abstracts, and you should demand no less from your lease abstraction vendor. Also, remember that the lease abstract template they use matters a lot. The template becomes the backbone of the abstraction project, simplifying the complexity and scaling to manage the volume of leases in a portfolio. Your core business focus area is not lease. Your lease abstraction vendor should have enough expertise and experience to suggest the lease abstraction template that’s right for you. If your existing lease abstract templates fail to capture critical information, your lease abstraction vendor must be able to catch that and fix it. They should be able to guide you through the process of streamlining and designing optimal lease abstraction templates. Our blog post, Is your lease abstraction set up accurate, offers more information on this. 

Accurate and timely lease abstracts are a must to stay on top of your lease portfolio management process and picking the right vendor will help you make better operational and strategic decisions; accurately, consistently, and fully.

Rebolease.com, powered by RE BackOffice, Inc., is a premier provider of lease abstraction, administration, and accounting services. Headquartered in Pittsburgh, PA, we are a global boutique firm, providing high-quality services to top-tier clients across industry verticals, covering every type of lease and on any lease platform. We are proud to be a trusted partner, for 15+ years, to leading retailers, REITs, property owners/managers, and corporate accounts seeking strategic advantage. All client projects are performed in-house. Please contact us today to learn more.  

4 Key Benefits of Outsourcing your Lease Abstraction Project

 

Leases are critical business documents that drive key strategic decisions, and your lease abstracts help you make those decisions. While lease abstracts are the first step to staying on top of your lease portfolio management process, getting your leases abstracted in-house can be challenging due to various reasons such as the high resource costs, lack of resources, tight timelines, etc. In our blog this week, we discuss how signing up with a lease abstraction vendor can help you overcome these challenges.

Cost-efficiency

By working with a lease abstraction services vendor, you can save on costs that you would incur if you hired lease abstractors in-house, on your payroll. It helps you eliminate training, HR-related expenses and save on lease agreement interpretation and translation costs, as all of these are taken care of by the vendor.

Scale up or down easily

Signing up with a lease abstraction vendor helps you scale your lease abstraction resources up or down as per your needs, allowing tide-over temporary resource requirements. For example, at the time of major mergers and acquisitions, or renewals across multiple locations, bringing a lease abstraction vendor onboard is a more efficient way to handle your abstraction needs than hiring in-house. 

Expertise

Vendors who provide lease abstraction services are specialized in what they do. It is their bread and butter, so they are naturally well-versed in the latest industry trends. They have more experience in handling multiple types of leases and tend to offer better accuracy, relevance, and compliance than in-house abstractors who comparatively have lesser exposure.

Improved turnaround time

Lease abstraction service vendors have a team of lease abstractors at their disposal, which means they won’t be overwhelmed by the volume of your lease abstraction project even if it runs into thousands of leases, and will be able to deliver your lease abstracts on time. Your in-house team may struggle to meet tight deadlines especially if it is a bigger project. 

There are a lot of lease abstraction vendors in the market, but you want to make sure you pick one with the right amount of expertise, experience, industry knowledge, and reputation so your lease abstracts are accurate, concise, complete, and relevant to your business needs helping you make better operational and strategic decisions, consistently. 


Rebolease.com, powered by RE BackOffice, Inc., is a premier provider of lease abstraction, administration, and accounting services. Headquartered in Pittsburgh, PA, we are a global boutique firm, providing high-quality services to top-tier clients across industry verticals, covering every type of lease and on any lease platform. We are proud to be a trusted partner, for 15+ years, to leading retailers, REITs, property owners/managers, and corporate accounts seeking strategic advantage. All client projects are performed in-house. Please contact us today to learn more.

Things to Consider when Finalizing your Lease Abstract Templates

 

Lease abstracts play a key role in simplifying the complexity of leases and helping you scale by making it easy for you to manage the volume of leases in a portfolio. However, for your lease abstracts to serve their purpose effectively, your lease abstract templates need to be accurate. Lease abstraction templates are the backbone of any lease abstraction project. Hence a lot of thought and foresight needs to go into their development. The one-size-fits-all approach to lease abstraction templates doesn’t work well, because each lease is unique and though quite a few key terms and financials (such as rent-rolls, important dates, notice period, etc.,) are universally considered important, there may be many other clauses that are important from the perspective of a particular lease/industry/tenant-landlord relationship, etc.

If you are considering outsourcing your abstraction process to a lease abstraction vendor, then one of the things for you to consider is their knowledge and experience in terms of the template definition. Abstracting the key data points from a lease onto a template is not a difficult task, but identifying which data points are important and need to be captured, certainly is, as it brings the lease abstraction service vendor’s judgment and industry expertise into play.

Another aspect to consider when finalizing your lease abstraction template is the amount of data that needs to be captured. Sometimes, in a bid to ensure no information is left out, some lease abstractors tend to copy-paste entire clauses into the abstract, rendering the lease abstraction virtually pointless. What’s the use of getting a lease abstracted if the lease abstract is more or less a copy-and-paste version of the original lease!

Pick an experienced lease abstraction vendor who will be able to offer you guidance and help you finalize a lease abstract template that’s right for you. They should be aware of the nuances of your business/industry. For example, someone who is well-versed in retail lease abstraction would know retail-specific clauses like percentage rent, right to audit, etc., and how they need to be captured.  Apart from bringing their overall industry knowledge and expertise to the table, your lease abstraction vendor must be willing to sit down with you and understand your specific business needs and help you identify what clauses of the lease will be of importance to you, in particular. 

Rebolease.com, powered by RE BackOffice, Inc., is a premier provider of lease abstraction, administration, and accounting services. Headquartered in Pittsburgh, PA, we are a global boutique firm, providing high-quality services to top-tier clients across industry verticals, covering every type of lease and on any lease platform. We are proud to be a trusted partner, for 15+ years, to leading retailers, REITs, property owners/managers, and corporate accounts seeking strategic advantage. All client projects are performed in-house. Please contact us today to learn more.  

What to consider when assessing your lease abstraction vendor’s experience?

 

If you are considering outsourcing your lease abstraction process, then it is because you already know the benefits of hiring a lease abstraction company to abstract your leases. 

Outsourcing lease abstraction 

  • Offers you significant cost benefits
  • Ensures you stay on top of your lease portfolio, no matter how short-staffed you are on the lease portfolio management front
  • Allows you to benefit from the expertise and industry experience of your lease abstraction vendor

However, in order to actually enjoy these benefits, you should pick the right lease abstraction vendor. One of the many things to look at when considering a lease abstraction vendor is their experience. Generally, clients tend to look at the number of years the lease abstraction vendor has been in the business. While experience in terms of industry-years is certainly a major factor impacting lease abstraction vendor selection process, it shouldn’t be the only one. The element of experience has multiple aspects to it. When looking at your lease abstraction vendor’s experience, two other areas to consider are, if they have experience.

Serving both, landlord & tenant 

Has your lease abstraction vendor worked with both tenants and landlords, or, is their experience largely limited to one of them? Leases are complex legal documents. You need someone who understands complexities and nuances of your leases that represent the culmination of negotiations between lessor and lessee. A lease abstraction vendor who has experience working with lessors and lessees over the years has a much broader perspective than someone who has been typically involved only with one side, such as the Landlord or the Tenant. Such a vendor will be able to bring their rich and diverse understanding and expertise into your lease abstraction project, driving maximum value for you.

Serving clients from your industry

Every lease is unique, and leases pertaining to each industry have their own nuances. When picking a lease abstraction vendor, you might want to consider someone who has experience working with clients in your industry. This is especially true in case of industry verticals like Cell-tower, healthcare, retail, etc, where there are a lot of industry-specific clauses and documents such as Tower co-location agreements, HIPAA regulations impacting the lease liabilities, percentage rent, and related audit rights, etc.

Taking a second look at the experience criterion from these two additional angles that we discussed will help ensure you pick a lease abstraction vendor who is able to abstract the key elements of the lease that you actually need in order to make better operational and strategic decisions; accurately, consistently, and fully.


Rebolease.com, powered by RE BackOffice, Inc., is a premier provider of lease abstraction, administration, and accounting services. Headquartered in Pittsburgh, PA, we are a global boutique firm, providing high-quality services to top-tier clients across industry verticals, covering every type of lease and on any lease platform. We are proud to be a trusted partner, for 15+ years, to leading retailers, REITs, property owners/managers, and corporate accounts seeking strategic advantage. All client projects are performed in-house. Please contact us today to learn more.