Exercise #1: Abstract from Scratch (Part 1)

Info: Downloadable exercise files are located at the bottom of the page.

Video: Abstract from Scratch (Part 1)

Instructions

In this exercise, the abstractor will create a new lease by making a copy of an existing template, then navigate to relevant sections of rAbstract and enter or update the values as displayed. Upon completion, the abstractor will run the Lease Abstract Report.

Documents:

• Office Lease, dated 7/15/2018
• Commencement Date Letter, dated 9/4/2018 (Document confirmed the actual Commencement Date as 9/1/2018 and Expiration Date as 8/31/2023)

Tenant Name: Chicago Consulting, LLC

Lease Term: 5 year term commencing on the Commencement Date

Commencement Date: 9/1/2018

Expiration Date: 8/31/2023

Space: Suite 250

Rentable Square Footage: 2,500

Base Rent Schedule:

Period	Annual Rent	Monthly Rent	PSF
Lease Yr. 1	$75,000.00	$6,250.00	$30.00
Lease Yr. 2	$76,250.00	$6,354.17	$30.50
Lease Yr. 3	$77,500.00	$6,458.33	$31.00
Lease Yr. 4	$78,750.00	$6,562.50	$31.50
Lease Yr. 5	$80,000.00	$6,666.67	$32.00

Note: Notice rent is increasing by $.50/sf/year; use the Wizard to create the rent steps.

Base Rent Abatement: Tenant entitled to abatement of Base Rent only for the first 2 calendar months of the Term commencing on the Commencement Date.

Base Rent Abatement - Recurring Charge:

• Period: 9/1/2018 - 10/31/2018
• Annual Rent: $6,250
• Monthly Rent:
• Rent per PSF:

Once you have entered the Rent Abatement, please add a note to the Abatement Recurring Charge and then click “Report Display” to show “Standard”. This will allow for the note to appear on the Rent Roll.

Recoveries: On the Financial Recoveries screen you will be setting up 2 Recoveries (Operating Costs and Taxes). By using a template, the 2 Recovery types are already set up, so you only need to enter the applicable data points pertinent to your specific lease.

Operating Expense Base Year: Calendar Year ending 12/31/2018

Real Estate Tax Base Year: Taxes for the fiscal year beginning 7/1/2018 and ending 6/30/2019.

Tip: Remember to click the hyperlink to “Spaces” which allows user to choose the specific Space to which the Recovery applies.

Tenant's Proportionate Share: 1.3585%, based on the rsf of the Premises (2,500 rsf) divided by the rsf of the Building (184,016 rsf).

Variable Operating Expenses are subject to a gross-up of 95%.

Operating Expense Cap: "Controllable Expenses" per rsf shall not exceed 103% of the Tenant's Proportionate Share of the previous Adjustment Year.

Note: Recovery cap information is entered on both the financial recoveries screen (as Yes / No) and in the Expense Recovery Clause.

Security Deposit: In the form of cash in the amount of $18,750. Provided no default, the security deposit shall be reduced by $5,417 on the 2nd anniversary of the Commencement Date  (9/1/2020), bringing the total Security Deposit to $13,333.

Tenant Improvements: Tenant to construct the Improvements to the Premises and LL to provide Tenant with a Construction Allowance in the amount of $87,500 (being $35.00/sf). The Allowance language is in Exhibit B.

Any amount of funds remaining from the Construction Allowance (being not requested for disbursement from Tenant) on 3/31/2019 shall be forfeited and LL shall have no further right to fund the balance.

Info: As you enter the Tenant Improvement Clause, you can also enter a critical date for 3/31/2019, as the latest date for LL to fund the Construction Allowance, else LL to retain the balance.

Estoppel Clause: Tenant to execute estoppels within 10 days of request.

Holdover Clause: Holdover rent shall be 200%.

Parking Clause: Tenant entitled to 2 unreserved parking permits at current market rates, subject to increase. Current rates for unreserved permits is $90/space/month.

Note: if Tenant pays a known amount for parking, escalations, supplemental HVAC etc., a recurring charge can be set up on the Recurring charges screen which will allow the charges to appear on the Rent Roll.

Late Fees & Interest:

• No late fee language in Lease
• Interest as follows: If not paid within any applicable grace period, all payments becoming due and remaining unpaid when due shall bear interest until paid at the greater of:
  1. 12% per annum or
  2. 3% per annum above the corporate base rate of interest charged from time to time by Chase Bank but in no event at a rate which is more than the highest lawful rate in the State of Illinois.

Renewal Option: Tenant shall have the option to renew the Term for 5 years with notice to LL at least 180 days prior to expiration of the Initial Term. Base Rent shall be 95% of market rate. Renewal Option is in Exhibit C.

Note: All other clauses and options will need to have an Applicability Status of Silent. Click the “Silent” button on the Tool Bar, which will make all Applicability of “Pending” change to “Silent”.

This written exercise, including certain screen shots, exposes the user to areas of the application considered the most significant to learning this specific task. The user is encouraged to view the video related to this task to be exposed to the entire learning curve of this exercise.

Exercise Files