WHY IN-HOUSE ABSTRACTING IS INVALUABLE
TO DUE DILIGENCE
Real Diligence undertakes a unique approach to due diligence valuation in that the analysis begins at the lease abstracting level. Real Diligence abstracts leases "in-house" utilizing seasoned abstractors who have examined thousands of leases. This is key for several reasons.
1. Customized Lease Analysis
A due diligence review that begins at the abstracting level provides a significant advantage in that the abstracted leases (one of the primary building blocks for any due diligence valuation) are created with both a general due diligence perspective in mind as well as allowing for the incorporation of specific issues into the lease analysis.
Case in Point.
For example, Real Diligence provides an exhaustive review and analysis of each tenant reimbursement requirement as sanctioned by specific lease language. This process begins in the abstract phase by customizing our abstract form to reflect the expense categories found on relevant Income/Operating Statements and Offering Memoranda. A reimbursement analysis is then conducted whereby each tenant lease is analyzed to determine whether each expense category may be passed through to the specific tenant and whether that amount is appropriately allocated (e.g., accounting for base years, caps, gross ups). This type of mapped expense category analysis is critical because it facilitates a one-to-one comparison to the Seller's reimbursement figures per expense category. The reimbursements per tenant are then totaled to result in a Real Diligence reimbursement amount specifically sanctioned by the leases.
2. Uniformed Approach to Expense Reimbursement
Moreover, in-house lease abstracting results in a uniformed approach to the reimbursement of expenses. Broad lease language is analyzed on a project level with the results incorporated into all of the abstracts so there are no discrepancies between abstracts as to whether specific lease language appropriately permits a pass through of a specific expense category.
3. Big Picture Perspective
Finally, due diligence is a fluid process in which a specific issue for a specific tenant may arise at any time. By abstracting the leases in-house, Real Diligence is able to share "discoveries" for any one tenant among the full abstracting staff to better ensure that all issues that could potentially be relevant for any tenant are considered for every tenant.