Commercial leases are central to a property’s income profile. Before seeking financing, owners and buyers can review lease terms, expiration dates, renewal options, concessions, tenant obligations, and reimbursement provisions. An organized lease analysis helps explain both current cash flow and upcoming rollover.
Start With the Rent Roll and Executed Leases
Compare the rent roll with signed leases and amendments. Check suite or unit identification, base rent, additional rent, deposits, options, expiration dates, and occupancy status. Differences should be documented rather than left for the lender to discover later.
Identify Rollover and Concentration
Note major expirations, tenant concentration, vacancy, concessions, and renewal discussions. A property with meaningful rollover may require more context about leasing strategy, tenant quality, expected downtime, and planned improvements.
Review Expense Responsibilities
Lease language may allocate taxes, insurance, maintenance, utilities, or common-area costs differently across tenants. Understanding those provisions helps reconcile the lease income with the operating statements and clarifies which expenses remain with the owner.
This article is for general educational purposes only and is not personalized financial, legal, tax, or legal advice. Lease interpretation and underwriting treatment require review by qualified professionals for the specific transaction.
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