Commercial Real Estate Due Diligence

<p> Greetings. Although this group is small, it is much needed. There is no good vehicle for communication across our industry. I might, however, suggest the National Academy of Building Inspection Engineers (<a href="http://www.nabie.org">www.nabie.org</a>) as one possibility. </p> <p> I will also place a shameless plug for becoming a Criterium Engineers owner. Tired of the ridiculous fees that the inspection networks pay. Want to control your own destiny. Now may be a good time. </p> <p> Anyway, hope to participate in other interesting discussions. </p> <p> Peter </p> <p> </p>

<p> Today, financial institutions are under increasing pressure to shore up their balance sheets reduce their exposure to trouble assets. The problem will eventually lead to an increase need for property due diligences reports as bankruptcies increase. I am seeing early signs financial institutions and investor groups from around the world are beginning to look for valued assets during a time of uncertainty. If history repeats itself here it will not be long before the due diligence industry experts will be on site doing a variety of assessment reports to ascertain equity value and will demand a more rigorous due diligence reporting. Is anyone else seeing an up tick of inquires? </p>

<p> At the core of institutional investment grade commercial real estate transactions, is the due diligence process, where risks are evaluated and measured against a properties&#39; performance. Here is a partial list of concerned topics and Ideas the site could cover. </p> <ul> <li>Lease Analysis - Evaluate responsibility for maintaining contracts, ability to obtain transference of municipal benefits, and status of appurtenances attached to the sale of the property. </li> <li>Property Repositioning - Establish best practices for pre-empting opposition, moving entitlement process forward and accommodating affordable housing, Zoning, etc. </li> <li>Legal Issues - Determine the optimum legal structure for conducting deals, scrutinize representations and warranties, and prepare for post contract issues. </li> <li>Tax Considerations - Get a primer on deferring tax consequences as well as accounting for costs related to acquisitions, improvements and meeting environmental requirements. </li> <li>Financial Metrics - Learn to analyze leases, insurance coverage, appraisals, debt loads and expenses in assessing the market value of commercial real estate. </li> <li>Physical and Environmental Evaluations - Determine how asbestos, oriented strand board, plumbing, electrical, engineering, vertical transport and architectural conditions affect property valuation. </li> <li>Market Evaluation - Location and external influences on future value analysis. </li> </ul>