due diligence checklist (example). key information (1/5) leasing / covenant strength...

Due Diligence Checklist bij Handboek Vastgoedmanagement © Noordhoff Uitgevers, Groningen/Houten 1

DUE DILIGENCE CHECKLIST (EXAMPLE)


KEY INFORMATION (1/5)Leasing / covenant strength

CHECKED N/A COMMENTS

Lease lengths and breaks / notification

Passing rents

Repairing obligations

User

Alienation

Insurance – responsibility and cover (advise insurers)

Rent review provisions

Servitudes

Rent free periods, other tenant incentives

Calculation of effective rent

Property management / utilities / service charge

Indexation

Leasing / marketing plan

Tenant disputes


• Tenant financial statements / credit reports

• Tenant payment history

• Rent deposit list

• VAT status

• Potential liabilities for investor in case of bankruptcy covered


KEY INFORMATION (2/5)Areas and physical / planning and use


• Location description

• Plans of accommodation / site and location

• Net/gross areas (BGF/NGF/GIF), confirmed by independent measurement

• Ceiling heights (finished and slab to slab) / eaves height

• Heating and cooling systems / sun protection / cabling standard

• Site cover and site density versus building permission

• Parking and adequacy for use / potential penalties


• Permitted use / consents

• Zoning / development plans

• Listing / conservation areas

• Cadastral plan

• Property registry excerpts


KEY INFORMATION (3/5)Expenditure and building management / building survey and environmental reports


EXPENDITURES

• Service charge statements and capital expenditures

• Current budgets (service charges and landlord expenses

• Reserve funds

• Insurance premiums

• Rateable values and rates payable

MANAGEMENT / STAFF

• Building staff and employment terms / contracts


• Building survey and environmental reports reviewed and any issues

addressed (see appendices A and B for a checklist of the items that

should be covered in these reports.


KEY INFORMATION (4/5)Legal, tax and finance / comparables


LEGAL

• Legal report reviewed and any issues

addressed (see appendix C for a checklist of

the items that should be covered in the report.

TAX

• VAT election / status (TOGC)

• Stamp duty status

• Corporate tax

• Trade tax

• Property tax

FINANCE

• Where applicable, the finance issues listed in

appendix D have been considered and

addressed.


RENTS

• Recent open market transactions and reviews

• Competing supply and quoting terms

YIELDS

• Summary of recent market transactions

• Comparable transactions


KEY INFORMATION (5/5)Projection assumptions


GENERAL

• Analysis period (minimum five years)

• Inflation rate assumptions

REVENUE

• Analysis of passing rents

• Market rents ()ERV analysis)

• Rental growth rates

• Parking and other income

• Service charge shortfall and period

• Insurance shortfall and period

• Marketing budget

• Renewal / relet terms

• Rent free assumptions

• Legal and agent fees

CAPITAL EXPENDITURE

• Capital improvement budgets

• Tenants’ improvement assumptions

REVIEW

• Projection checked by strategy research group


BUILDING SURVEY REPORT (1/4) - Appendix A -Structural and Architectural Systems


Foundations

Floor construction and loading

Roofs

Decks / balconies

Exterior walls

Window systems / skylights

Window washing system

Cradles, gantries and access systems

Site landscaping / topography / drainage

Rainwater disposal systems

Parking areas / decks / garages / spaces

Other paved areas

Truck docs / loading areas

Lifts / escalators

Stairs

Lobbies

Corridors

Plumbing systems

Toilet rooms

Deleterious materials (asbestos)

As built drawings and specs


BUILDING SURVEY REPORT (2/4)Mechanical systems / fire protection / warranties and guarantees


Equipment (heating and cooling)

Air distribution

Temperature control

Ventilation

Energy management

Building management system (and software)

Licences and copyright for BMS software


Fire detection and alarm systems

Smoke evacuation / stair pressurisation

Fire standpipes / hydrants

Wet and dry risers

Sprinklers

Hose reels

Fire certificate

Ownership of fire escape routes


Warrantees and/or guarantees


BUILDING SURVEY REPORT(3/4)Electrical systems / Regulatory compliance & health and safety / Maintenance and building services


Transformers (ownership)

Security systems (CCTV)

Communications system

Fibre optics / broadband


Health and safety compliance / risk assessments

Construction (design and management) regulations

Emergency procedures manual

Accessibility regulations (disability compliance)

Pending legislation


Service contracts

Maintenance handbooks

Maintenance repair logs

5 Year planned maintenance programme


BUILDING SURVEY REPORT (4/4)Insurance / overall comments


Replacement cost valuation

OVERALL COMMENTS ON THE BUILDING SURVEY REPORT


ENVIRONMENTAL REPORT - Appendix B -


• Site characteristics and adjoining sites

• Prior uses

• Remediation works

• Surrounding uses / hazards

• Desk top study

• Contaminated land register

• Prior investigation reports

• Warranties

• Storage tanks / pipelines

• Soil contamination

• Groundwater contamination


LEGAL REPORT - Appendix C -


• Tenure

• Title

• Rights / covenants / encumbrances

• Searches

• Pre contract enquiries and replies

• Leases (head leases and occupational leases)

• Planning

• Insurance

• VAT

• Construction leases

• Form of contract


FINANCE ISSUES - Appendix D -


DEBT

• Debt commitment in place

• Debt examination (if debt assumed in purchase)

CURRENCY RISK

• Hedging programme in place

ACCOUNTING / OTHER

• Structure issues (cash flow guarantees etcetera)

• Partnership agreements

• Accounting opinion

• Corporate review (company purchases)

due diligence checklist (example). key information (1/5) leasing / covenant strength...

Documents

key information

management building

building survey report

free assumptions legal

building permission

cooling systems

finance issues

period insurance shortfall