Workspace Property Trust is a commercial real estate company that specializes in the ownership, management, leasing, and development of office space across the United States. With 10 million square feet of space, 147 properties, and 578 tenant companies under its umbrella, the company oversees hundreds, if not thousands of commercial leases.
Whenever the Workspace team gears up for a property acquisition, analyzing and abstracting the existing leases for those properties is a critical component of due diligence, and essential to getting a favorable deal done. However, lease abstracting is technical, time-consuming and expensive, which is why in the past the Workspace team paid third parties to do the abstracting for them. With Conga AI Analyze, they were able to employ a technological solution to obtain comparable lease abstracts for an acquisition at considerable time and cost savings.
When Workspace prepares to acquire a new portfolio of commercial properties, there is an immediate need to abstract the leases held on those properties in order to do due diligence on the acquisition. This process requires locating and summarizing all significant terms in those leases in a single, concise document, so that it is easy to evaluate the value and major qualities of each lease. Principal elements of an abstract typically include rent, deposit(s), specific tenant and landlord rights, and timelines (such as expiry date).
The process of abstracting leases is laborious, and is most commonly done by attorneys. In the past, the Workspace team had always employed a third-party agency to do the lease abstracting. Even with a third party, however, abstracting the leases remained time-intensive and expensive. The cost could be as high as $1,000 per lease, which added up to a major investment when there were as many as 300 to 500 leases per acquisition. The process also takes a significant amount of time, typically months to do, which the Workspace team could ill afford, as they needed to quickly turn around and send invoices and rent renewals for the real estate leases they had just acquired.
Furthermore, there was a lack of visibility into the abstracts once they were created. While the abstracts were easier to read than the leases themselves, the third party abstracting firms simply catalogued them in a static Excel spreadsheet, which made it difficult to locate specific information without rereading the abstract in question. The information in the spreadsheet also contained frequent, human errors, further exacerbating problems with visibility and making it difficult for Workspace to leverage the information effectively.
Workspace wanted a more cost- and time-effective solution for lease analysis and abstraction, and turned to Conga AI Analyze to find it. Working with the example that Workspace provided, Conga’s team was able to leverage the AI Analyze application to replicate the format of the lease abstracts done previously by a third party.
Using the AI Analyze technology, the Conga team identified the fields needed to abstract key information from the leases. The technology was able to perform the lease abstracting significantly more quickly and less expensively than a third-party company could have done. In addition, there was no appreciable difference between the abstracts created by AI Analyze and those created previously by the human employees of the specialized, third-party lease analysis providers. To ensure the results were solid, Conga’s AI Analyze team performed a quality check of the data abstracted to ensure that it was accurate and consistent, and found no errors.
In addition to automating the creation of the lease abstracts in the document format required by the Workspace team, the Conga team also put the abstracts into an electronic format, so they could be stored and searched in an online database. As a result, Workspace employees can now go into the abstracts repository, and use a search bar to locate any needed piece of information quickly.
Lease abstracts are essential to a number of employee roles across the company, including operations, due diligence, and attorneys. As a result of the work done with AI Analyze, all of these individuals were able to access accurate lease abstracts more quickly. And the process created cost savings for the entire lease abstracting process.
Another advantage came as a result of the Conga team creating a second, digital version of the abstracted leases. This version of the abstracts were stored in a live, searchable database that made their contents and terms more visible, accessible, and potentially easier to leverage than the previous, paper-based abstracts.
- Significant cost reduction due to running lease abstraction through AI Analyze — a 25% cost savings over the abstracting companies used in the past. That’s as much as $125,000 in savings over the course of the acquisition.
- Benefited from 50% time savings — the time for the lease abstraction project was cut in half, compared to what it was previously with third-party abstactors.
- Better visibility into all lease data due to the abstracts being stored in a searchable, online database for easier review and time-savings where searching is required. The information is now readily accessible to employees throughout the company, including the operations, finance, and legal teams.
- Eliminated frequent human errors in the abstracts and catalogue spreadsheet due to manual processes. Conga’s AI Analyze was not only faster, but also considerably more accurate than the third party abstracting companies.
- Faster revenue creation, since the the legal team and finance team are now able to send out invoices/rent renewals in record time to collect billing for the properties they just acquired.