Because rental income usually drives real estate value, and because
leases and tenancies often conceal surprises, it is not enough for
investor or its counsel merely to read the leases, as suggested above.
One must look behind the leases, by asking for information such as the
following.

· Abstracts. Abstracts of the existing leases, including any in seller’s
possession or prepared by seller’s advisors.

· Antenna Leases. Antenna and other telecommunications leases,
particularly to review for termination rights and nonexclusivity.

· Brokerage. Any leasing brokerage agreements that will stay in place
after the closing. Amount and timing of any outstanding commission
obligations for any leases previously signed or now being negotiated.

· Correspondence. Correspondence with tenants regarding defaults,
administration, etc.

· Disputes. Pending disputes with tenants and eviction actions.

· Estoppel Certificates. Although primarily an issue for the closing,
investor’s due diligence may help identify timing problems with
obtaining estoppels and any terms of tenants’ leases that relate to or
limit the delivery of estoppel certificates. When estoppel certificates
are delivered for the closing, investor’s due diligence would also
include review of those estoppel certificates to identify and
understand any problems or issues they disclose.

· Guaranties. Existence, status, and strength of guarantors.

· Rent Roll(s). Spreadsheets showing all tenants, rents, escalations,
commencement dates/expiration dates, option terms, security deposits,
and tenant status.

· Security Deposits. Security deposits, including letters of credit or
other forms of cash and cash equivalents. Transition arrangements.

· Stacking and Options. Stacking plan, now and in the future, including
future interaction of all expansion, contraction, and renewal options.

· Standard Lease. Standard form of lease, on paper and in machine
readable format, including all exhibits (such as alteration rules,
building rules, design criteria).

· Tenant Financing. If the landlord gave any tenants financing for their
tenant improvements, then copies of all loan documents and information
about the status of these loans.

· Transfers. Any assignments, assumptions, and subleases.