Sublease agreement data extractor for ASC 842 sublease accounting, head lease consent and sublease rent in one abstract

A sublease abstract records two contracts at once: the sublease the company signed as sublandlord, and the head lease it still owes as tenant. A normal lease abstract template only has one set of columns, which is why sublease portfolios end up in side spreadsheets that nobody reconciles to the general ledger.

The fields split cleanly into three groups:

• From the sublease: premises and square footage, commencement and expiration, base rent schedule, abatement, operating expense and tax pass-through, security deposit, furniture and services, and the list of head lease sections incorporated by reference.
• From the head lease: the consent standard, any recapture right, the landlord share of sublease profit, permitted transfers that need no consent, and the remaining term and rent the sublandlord still owes.
• From the consent agreement: the conditions the landlord attached, whether the sublandlord is released (it almost never is), and any direct-recognition or attornment language that protects the subtenant if the head lease ends.

LeaseAbstracts returns each of those as its own field with a link to the page and clause it came from, so a reviewer checks a value in seconds instead of re-reading 80 pages. If you are abstracting the head leases themselves, our lease agreement data extractor covers the full commercial lease field set.

Under ASC 842 the sublandlord becomes an intermediate lessor and accounts for the two contracts separately: it keeps the head lease liability and right-of-use asset as a lessee, and accounts for the sublease as a lessor. The sublease does not extinguish the head lease, and the sublease income is not netted against the head lease liability. Sublease income is also one of the lines in the lease cost disclosure.

The classification point is where US GAAP and IFRS 16 part ways. IFRS 16 classifies a sublease against the right-of-use asset from the head lease, so a sublease of the full remaining term is often a finance sublease under IFRS 16 and an operating sublease under ASC 842. Every one of these tests needs the same inputs: sublease term, sublease payments, head lease remaining term and head lease rate. The ASC 842 lease data extraction page lists the full input set for the head lease side.

When the sublease income over the sublease term is less than the head lease cost for the same period, that is an indicator that the head lease right-of-use asset may not be recoverable, and the asset group gets tested for impairment under ASC 360. This is the entry that surprises finance teams in a soft office market, because a sublease signed below the head lease rent usually triggers it.

A simple example. A company holds 10,000 rentable square feet on a head lease at $42 per square foot with four years left, so the head lease cost over the remaining term is about $1,680,000. It subleases the whole floor for the same four years at $29 per square foot with five months of free rent, so the sublease brings in about $1,039,000. The roughly $641,000 gap is an impairment indicator, and the test that follows uses the sublease cash flows as the expected recovery.

Every figure in that test comes from the documents: rentable area, both rent schedules, the abatement, the expense pass-through that determines whether the sublease is gross or net, and the exact head lease expiration. Abstracting them with a clause reference is what lets the auditor tie the impairment memo back to the signed leases. For the abatement side of the same calculation, see rent abatement extraction.

Before a sublease is marketed, three head lease clauses decide how much it is worth to the sublandlord: consent, recapture and profit sharing.

• Consent standard. Most commercial leases require landlord consent to sublet. Whether consent may not be unreasonably withheld, or is at the landlord sole discretion, changes how hard it is to close the deal.
• Recapture. Many office and retail leases let the landlord take the space back instead of approving the sublease. If the landlord recaptures, the sublandlord loses the sublease but sheds the rent.
• Profit sharing. A common clause gives the landlord a share, often half, of sublease rent above the head lease rent after the sublandlord recovers its costs. The definition of costs (brokerage, free rent, improvements, legal) decides the number.

These clauses are frequently amended, which is why the abstract has to read the amendments and not just the original lease. Our assignment and subletting clause guide sets out the usual drafting, and the key lease clause extraction page covers the wider clause set.

A sublease cannot outlast the head lease, and most are drafted to expire a day or more before it. The abstract should hold both dates in adjacent columns, because a sublease expiration that matches or passes the head lease expiration is a drafting error that someone will have to fix with the landlord.

The other date risk is early termination. If the head lease ends for any reason, through a default, a casualty or a termination option exercised by either party, the sublease usually ends with it unless the landlord signed a recognition or non-disturbance agreement in favor of the subtenant. Record whether that protection exists. Subtenants ask for it, sublandlords rarely volunteer it, and it changes how a lender or buyer reads the income. The critical date extraction page covers notice deadlines on both documents.

Three US buyers order sublease abstracts, each for a different reason.

The volume is not small. Companies that cut office footprints after 2020 have been subleasing space they still owe rent on, and every one of those subleases is an extra contract for the lease accounting team. For tenant-side portfolio work, see our lease abstraction for tenants page.

Use counsel to negotiate the sublease and the consent, and software to turn the signed documents into data. A real estate attorney is worth paying to draft a consent agreement that protects the sublandlord. Paying the same hourly rate for someone to type the sublease rent table and the recapture clause into a spreadsheet is not.

LeaseAbstracts is self-serve: Solo is $49 a month for 15 leases, Team is $149 a month for 75, and Firm is $399 a month for 250 with API export, all billed without a sales call. A sublease, its consent and its head lease count as separate uploads, and each comes back as a source-linked abstract you can export to Excel or CSV and load into the lease accounting system you already run. Plans and per-lease figures are on the pricing page.