Kensho industry use case: Lease abstraction
Kensho Extract automates lease abstraction for REITs, pulling critical terms from complex commercial agreements directly into ERP systems.
This blog is part of our series on how Kensho solutions can be used in various industries to unlock insights hidden in messy and unstructured data.
Background
Real estate investment trusts (REITs) purchase, own, and operate properties such as office buildings, apartment complexes, warehouses, shopping malls, hotels, and storage sites. REITs operate similarly to mutual funds, in that many are publicly traded, giving individuals the opportunity to invest in commercial real estate without having to purchase property themselves.
Managing a portfolio of commercial real estate is no easy task, though, particularly considering the length and complexity of leases involved. That’s why REITs have a shared services division tasked with a process called lease abstraction, in which the most pertinent information within a complex commercial lease agreement is extracted and uploaded to an enterprise resource planning (ERP) system such as Oracle or SAP. This allows the REIT to track its finances and better manage its properties, while also making its holdings more legible to third parties like investors and analysts.
Use Case Drill Down: How lease abstraction fits into the wider industry
Challenges
As things currently stand, lease abstraction is a manual and time-consuming process. Oftentimes, an analyst must search through pages of text to find the relevant tidbits of information, such as the monthly rent or lease termination date. While some REITs rely on AI and machine learning for lease abstraction, many existing solutions cannot process multiple documents at once (leases, contracts, addendums). Additionally, it can take months or even years to train machine learning models on specific client leases.
Solution
Following is how the Kensho team envisions our tools being implemented for this use case:
Kensho Extract can provide tremendous time savings and improved accuracy for the lease abstraction process. If it takes an analyst an average of 30 minutes to read through a lease and manually extract key values to upload, one of Kensho’s tools that’s in development now, Kensho Extract Key Value Pair (KVP) will be able to do the job in a fraction of the time. Its AI can handle machine readable or scanned documents, while the interface is extremely user friendly and allows the analyst to pick and choose the correct recommendations.
In addition to identifying key values — such as lessor, lessee, lease payments, commencement and termination dates, and details on the premises — Kensho Extract KVP also provides confidence scores to assist a reviewer in focusing on the riskiest recommendations. Altogether, Kensho Extract KVP accelerates and simplifies the lease extraction process.
Use Case Visualized: Key Value Extraction from lease document PDF files
Contact us to discuss how Kensho’s tools can help solve your industry challenges.
