Lease Due Diligence in Acquisitions - Allen Matkins University - Crystal Lofing
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Rent and operating expense recoveries are the main sources of income for a commercial building owner. That is why due diligence of leases is imperative when when purchasing a commericial property. Due diligence usually happens before the purchaser of the property goes none refundable with their deposit money, and is an important element of underwriting a commercial building. The key provisions of every lease that have material economic impact should be identified and assessed. Included in these are: rental rates, unexpired rights to expand, renewal rights, reimbursement to tenants for improvements, Proposition 13 impacts and rights to terminate
Rent and operating expense recoveries are the main sources of income for a commercial building owner. That is why due diligence of leases is imperative when when purchasing a commericial property. Due diligence usually happens before the purchaser of the property goes none refundable with their deposit money, and is an important element of underwriting a commercial building. The key provisions of every lease that have material economic impact should be identified and assessed. Included in these are: rental rates, unexpired rights to expand, renewal rights, reimbursement to tenants for improvements, Proposition 13 impacts and rights to terminate
