THE DUE DILIGENCE GAP
The Due Diligence Gap No Model Can Catch
Every acquisition underwriting model rests on in-place lease revenue. The rent roll tells you what tenants are paying today. The lease abstracts tell you the scheduled escalations and recovery structures. But neither tells you whether the billing configurations in the seller's property management system actually reflect what the leases say, and in most portfolios, they don't match perfectly.
Missed rent escalations, incorrectly configured CAM recovery structures, and CAM caps that were never enforced don't show up as line items in a rent roll. They show up as lower-than-contracted NOI, embedded in the baseline you're acquiring. If you're buying a 20-asset retail portfolio at a 6.5% cap rate, a $500,000 annual execution gap spread across the portfolio is worth roughly $7.7 million in unrecognized value. You won't see it in the offering memorandum.
Firststreet gives investment teams a systematic way to verify lease economics during due diligence, not just reviewing abstracts, but comparing structured lease logic against actual billing data to identify where execution has diverged from the lease.
HOW IT WORKS
What Underwriting Teams Can Do With Firststreet
During due diligence, Firststreet ingests the lease documents and operational data provided by the seller and runs a systematic comparison. The output is a prioritized list of execution discrepancies, ranked by financial impact, with evidence tracing each finding back to the governing lease provision.
For stabilized acquisitions, this process also produces a governance baseline for post-acquisition operations: a structured model of every lease obligation that becomes the foundation for ongoing monitoring once the portfolio is owned.
NOI Verification
Compare lease-modeled revenue against trailing billing data to identify where in-place NOI diverges from what the leases actually require.
Execution Risk Quantification
Receive a prioritized finding set with financial impact estimates, so you know the materiality of each discrepancy before you decide how to address it at the negotiating table.
Post-Acquisition Governance Baseline
The lease models built during due diligence transfer directly into ongoing portfolio governance, no redundant re-abstraction after close.
Verified
+$0
Rent schedule matches seller abstracts, 22 of 30 leases
NOI verified
Gap Found
-$127,000/yr
Escalations not applied across 6 retail units, price exposure
8 leases affected
Governance
READY
Post-acquisition monitoring baseline built, no re-abstraction needed
All 30 leases loaded
ONGOING VALUE
Ongoing Underwriting for Portfolio Owners
The same functionality that serves acquisition due diligence applies to in-portfolio assets during hold. Investment teams tracking asset performance against underwritten returns need to know whether execution has stayed on track, whether escalations have been applied correctly since acquisition, whether recovery structures are producing the income the underwriting model projected, and whether any new discrepancies have emerged that affect forward income assumptions.
Firststreet's continuous monitoring capability means that investment teams don't need to commission a new lease audit every time they want to validate a specific asset's income profile. The governance layer is running continuously, and the finding set is always current. When a major lease renews, an anchor tenant triggers a co-tenancy clause, or a new asset manager takes over, the platform provides an immediate read on whether execution is aligned with lease obligations.
