A rent roll is a one-page table of every tenant in a building: who they are, how much space they lease, what they pay and when their lease ends. In a sale, it is usually the first document a buyer sees and the one the asking price is built on.
It is also prepared by the seller. That does not make it wrong. It makes it a claim to be checked, line by line, against the leases it summarizes.
What a rent roll should show
A useful commercial rent roll has one row per suite and, at minimum, these columns:
- Suite and tenant: the space and the legal name of the tenant on the lease
- Square feet: leased area for each suite, adding up to the building total
- Lease dates: start, rent start and expiration
- Base rent: monthly, annual and per square foot
- Escalations: the next increase, its date and its amount
- Recovery type: gross, modified gross or triple net, and the tenant’s share of expenses
- Security deposit: the amount held
- Options: renewal, expansion or early termination rights
- Status: current, past due or in free rent
If a column is missing, ask for it. A rent roll that shows only tenant names and monthly rent leaves the buyer to discover the rest during due diligence, often in the last week.
Who wrote it, and when
Every rent roll has an as-of date, and it should be printed on the page. A rent roll from three months ago may predate a move-out, a new lease or a tenant who stopped paying.
Check it against two other documents. The trailing twelve months of income and expenses, often called the T-12, should show the rent the roll says is being collected. The seller’s bank deposits, if the purchase agreement lets you see them, should show it arriving.
Seven lines that hide risk
Some rows deserve a second look before any number is built on them:
- Month-to-month tenants. Income that can leave on short notice is not the same as signed term.
- Leases ending soon. Anything expiring in the first 12 to 24 months of ownership is a renewal you will negotiate, not one you bought.
- Free rent still running. A lease can show full rent while the tenant pays nothing for several more months.
- Rent above market. A tenant paying well over market may ask for a cut at renewal, or leave.
- Related-party tenants. A tenant connected to the seller may not stay, or may not pay the same rent, once the seller is gone.
- Past-due balances. Ask for an aged receivables report. A tenant 90 days behind is a vacancy in waiting.
- Square feet that do not add up. If the suites do not sum to the building’s area, find out why before you price it per square foot.
Two more are worth a line each: early termination rights, which let a tenant leave before the expiration date shown, and renewal options at fixed rents below market, which favor the tenant later.
A worked example
The numbers here are illustrative. Say a buyer is looking at a 12,600 square foot strip center in Laramie with six suites, listed at $1.9 million. The offering shows net operating income of $138,000 and a 7.25% cap rate:
$138,000 ÷ 0.0725 = $1,903,448
The seller’s rent roll, simplified:
| Suite | Sq ft | Rent per sq ft | Annual rent | Seller’s note |
|---|---|---|---|---|
| 1 | 2,400 | $12.50 | $30,000 | Expires 2030 |
| 2 | 1,800 | $12.00 | $21,600 | Expires 2029 |
| 3 | 2,200 | $11.00 | $24,200 | Expires 2028 |
| 4 | 2,000 | $10.80 | $21,600 | Month to month |
| 5 | 2,400 | $11.50 | $27,600 | Expires 2031 |
| 6 | 1,800 | $14.00 | $25,200 | Expires in 7 months |
| Total | 12,600 | $150,200 |
Base rent of $150,200, less a 5% vacancy allowance ($7,510) and $4,690 of costs the tenants do not reimburse, gives the $138,000.
Reading the leases behind the roll turns up three things:
- Suite 2 is in free rent for four more months, at $1,800 a month. That is $7,200 the buyer will not collect.
- Suite 4 is month to month, and the tenant is a business related to the seller. If it leaves at closing, the buyer faces about nine months of downtime ($16,200 of lost rent), say $20,000 of tenant improvements and $6,000 of leasing commissions. That is $42,200.
- Suite 6 pays $14.00 per square foot. Comparable space nearby leases for about $11.50. A renewal in seven months at market would cut rent by $2.50 on 1,800 square feet, or $4,500 a year.
Now rebuild the value. Stabilized NOI falls by the Suite 6 reset:
$138,000 less $4,500 = $133,500
$133,500 ÷ 0.0725 = $1,841,379
Then subtract the one-time items, the free rent and the cost of re-leasing Suite 4:
$1,841,379 less $7,200 less $42,200 = $1,791,979
That is about $111,000 below the asking price, before any change in cap rate for the month-to-month risk. The buyer now has a reasoned basis to renegotiate, ask for a seller credit, or require a signed lease on Suite 4 before closing. Whether and how to write those terms into the contract is a question for the buyer’s attorney.
Tie every line to a lease
The rent roll summarizes. The lease decides. For each row, the buyer should be able to point to the signed lease and every amendment that supports it.
Two tools make that practical:
- Lease abstracts. A short, structured record of each lease, with every term cited to its section and page. Comparing abstracts to the rent roll shows mismatches quickly. Our lease abstract program produces two pages per lease and a spreadsheet row that lines up with the rent roll.
- Estoppel certificates. A signed statement from each tenant confirming its rent, dates, deposit and any disputes with the landlord. Ask for them early; tenants are not always quick to sign.
Where the rent roll, the lease and the estoppel disagree, the difference goes on a list, and the list goes to the seller.
Check the roll against the T-12
The rent roll says what tenants owe. The trailing twelve months say what came in. In the example, the roll shows $150,200 of annual base rent. Say the T-12 shows $139,800 collected. The $10,400 gap needs an explanation, line by line:
- Suite 2’s free rent in the trailing year: two months at $1,800, or $3,600
- Suite 4 three months behind, at $1,800 a month: $5,400
- A one-time $1,400 rent credit to Suite 6 for a roof leak
$3,600 + $5,400 + $1,400 = $10,400
Here the gap is fully explained, and two of the three items are already in the buyer’s adjustments. When a gap cannot be explained, it is either income that does not exist or a tenant problem nobody has mentioned. Both belong on the list for the seller.
Deposits and prepaid rent
The rent roll should show each tenant’s security deposit, and the deposit ledger should match it. After closing, tenants will look to the new owner for their deposits, so the buyer needs them credited or transferred at closing. The same goes for any rent a tenant has paid in advance. How that is handled is written into the purchase agreement, which is your attorney’s work; the rent roll is where you find the amounts.
What to request alongside it
Ask for these on the same day you receive the rent roll:
- Every lease, amendment, side letter and assignment
- The trailing twelve months of income and expenses
- An aged receivables report
- The security deposit ledger
- The last two years of CAM reconciliations, if the leases are net
- The current property tax notice
- Any open tenant disputes, notices or defaults
Our document checklist for commercial property reviews lists each item and where sellers usually keep it.
Columns to add when missing
When a rent roll arrives thin, add these columns yourself as the leases come in: the next escalation date and amount, the recovery type, the option deadlines, the deposit held and the source page in the lease for each figure. A rent roll rebuilt that way is no longer the seller’s claim. It is your own record.
Before your due diligence ends
An acquisition review tests the seller’s rent roll, leases and pro forma against each other and ends in a priced memo: walk, renegotiate or close. It takes 7 business days (rush in 3, quoted), from $2,500 per property (indicative). Book a free 30-minute scoping call as soon as the rent roll arrives, so the review finishes while there is still time to act on it.
