Lease reviews during due diligence

For every acquisition, in-house counsel reads each lease and writes it up into a standard two-page review. The leases often run past fifty pages, and there is one review for every tenancy in the building.

Alongside that, figures are cross-referenced in people's heads: the lease against the tenancy schedule, the schedule against the bank guarantees, all of it against the vendor's own numbers. Their analyst was blunt about what that costs. Things slip by, they said, just naturally, because there is so much data. One vendor had used last year's statutory rates and undercooked the expenditure.

Then the deal closes and the property manager reads the same leases again to load them into the property system. They call that double handling. The way they put the whole job is that it all starts at due diligence, and they want it connected start to finish.

We built a data room from one of their own asset packs and pointed Sercha at it. It sorted the room, filing each document to the tenancy it belonged to, then read the master tenancy schedule and filled a lease review per tenant. Every figure cites the page it came from, including the ones in scanned PDFs, and amendments are followed through rather than treated as separate documents.

It raised what it could not reconcile: a bank guarantee that did not match the schedule, a tenant named two different ways across documents, and watch-outs worth a look before settlement, including arrears, insurance expiry and outstanding incentives. The finished reviews exported into their own template in a few minutes.

Three or four acquisitions a year means a due-diligence-only tool sits idle most of the time, so the work has to earn its keep between deals as well as during them. When a mismatch is flagged they want to know which document holds the bad figure, not just that two numbers disagree. And each fund's data has to stay walled off from every other fund's, which is enforced rather than promised.

The files themselves were the other thing. Their data room provider rights-manages documents so they often will not open once downloaded, which they called critical to solve. The answer is simple enough: a Sercha user gets added to each data room.