Exercise #2: Abstract from Scratch (Part 2)

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

Video: Abstract from Scratch (Part 2)

Instructions

In this exercise, the abstractor will create a new lease and take the given data points, navigate to relevant sections of rAbstract and enter 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 9/1/2015 and Expiration Date as 8/31/2020)

Tenant Name: Blackhawks Hockey Club

Lease Term: 5 year term commencing on Commencement Date

Commencement Date: 9/1/2018

Expiration Date: 8/31/2023

Space: Suite 200

Rentable Square Footage: 8,000

Base Rent Schedule:

9/1/2018 - 8/31/2021: $480,000.00 (Annual), $40,000.00 (Monthly), $60.00 (PSF)

9/1/2021 - 8/31/2023: $520,000.00 (Annual), $43,333.33 (Monthly), $65.00 (PSF)

Base Rent Abatement:

(Lease, section 1.B)

Tenant shall be entitled to an abatement of Base Rent only for the first 6 calendar months of the Term commencing on the Commencement Date.

Base Rent Abatement – Recurring Charge:

9/1/2018 – 2/28/2019: $40,000.00 (Monthly)

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

(Lease, section 2):

On the Financial Recoveries screen you will be setting up 2 Recoveries (Operating Costs and Taxes). The data below will be coming from Section 3 of the Lease.

Operating Expense Base Year:

(Section 2(a))

Calendar Year ending 12/31/18 with an estimated Stop Amount of $1,794,156/year.

Real Estate Tax Base Year:

(Section 2(a))

Taxes for the fiscal year beginning 7/1/18 and ending 6/30/19 with an estimated Stop Amount of $1,288,112/year.

(Remember to click the hyperlink to “Spaces” which allows to designate the specific Space to which the Recovery applies)

Tenant’s Proportionate Share:

(Section 2(a))

4.3474%, based on the rsf of the Premises (8,000 rsf) divided by the rsf of the Building (184,016 rsf).

Variable Operating Expenses are subject to a gross-up of 100%.

Operating Expenses are defined in Section 2(b) and include all expenses paid or incurred during the calendar year and management fees not to exceed 3% of gross revenues of the Building.

Taxes as defined in Sec 2(d) shall mean any and all taxes, assessments and charges levied against the Building, which LL shall pay or become obligated to pay in connection with the Building.

Note: Since we are not using a template, the above information will also need to be entered in the Clause section under Expense Recoveries.

Security Deposit

(Lease, section 20)

In the form of a Letter of Credit in the amount of $120,000.00.

Add a note that the Letter of Credit was issued by Citibank, N.A. dated 8/28/18 in the amount of $120,000 with an expiration date of 8/31/21.

Tenant Improvements

(Lease, Exhibit B):

Tenant to construct the Improvements to the Premises and LL to provide Tenant with a Construction Allowance in the amount of $280,000 (being $35.00/sf).

Any amount of funds remaining from the Construction Allowance (being not requested for disbursement from Tenant) on 9/30/19 shall be forfeited and LL shall have no further right to fund the balance.

Tip: As you enter the Tenant Improvement Clause, you can also enter a critical date for 9/30/19, as the latest date for LL to fund the Construction Allowance, else LL to retain the balance.

Estoppel Charge

(Lease, section 19):

Tenant to execute an estoppel within 10 days of request.

Parking Clause

(Lease, section 4.G):

Tenant entitled to 9 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.

Holdover

(Lease, section 15):

200% of Base Rent, Operating Cost Share Rent, Office Maintenance Cost Share Rent and Tax Share Rent in effect immediately prior to holdover.

Late Fees & Interest

(Lease, section 7):

• No late fee language in Lease;
• Interest as follows: If not paid within 5 days of the due date, all unpaid amounts shall bear interest until paid at the greater of (i) 12% per annum or (ii) 3% per annum above the corporate base rate of interest charged by Chase Bank but no more than the highest lawful rate in the State of Illinois.

Renewal Option

(Lease, section 66):

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.

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”.

Exercise Files