SPECIALTY DUE DILIGENCE
By living through and understanding true economic cycles which continually impact regions as well as specific product types, PWC’s approach to advising our Clients throughout the due diligence process proves to be far more comprehensive than the approach generally taken by other traditional assessment firms.
PWC is comprised of professionals with extensive technical knowledge, design and “hands-on” management / repositioning experience. Our team is capable of performing in-depth analysis on virtually all major property type classifications including single asset or portfolio evaluations of the following:
- Hospitality (Hotel / Resort / Timeshare) Properties
- Commercial and Mixed-Use Office Buildings
- Retail Shopping Centers
- Multifamily Residential (Apartment Complexes, Condominiums and Student Housing)
- Industrial / Warehouse Complexes
- Senior Living and Congregate Care Facilities
- Medical Facilities
- Master Planned Developments
- Adaptive Re-Use Buildings
- Government Highway, Prison and General Infrastructure
Our recent assignments have included detailed site reviews including adjacent parcels, investigative/destructive testing, indoor air quality surveys, asset repositioning together with capital expenditure (Cap-Ex) assessments, cost estimation related to “deferred” maintenance issues, code and non-compliance issues as well as sustainability certification programs and renewable energy systems viability. These assignments have been provided for numerous acquisition/disposition scenarios including:
- Partnership interest transfers/Asset Sales/Syndications
- Acquisition and Investor Advisory Services
- Deal / Loan Review Underwriting
- Cost-To-Complete Reports for idle projects
- Institutional or Equity Partner money placements
- Refinancing of Construction/Interim/Short-term debt
- Tax Exempt Bond and Municipal Bond financed projects.
Our professionals have the expertise to provide knowledgeable data with a keen insight over the course of fluctuating real estate markets, tailored to each of our Clients’ individual needs and reporting requirements.
PROPERTY CONDITION ASSESSMENTS – ASTM E 2018 – 15
Institutional Owners, Equity Partners, Lenders and Asset Managers must be constantly vigilant for possible liability issues associated with the high cost of repairing and/or replacing major building components such as roof systems, curtain walls, fenestrations, foundations, siding/stucco systems as well as large expanses of pavement and flatwork.
PWC recognizes that professionals skilled in a variety of disciplines are required to properly evaluate and cost out both short and long-term needs of a project. We coordinate a team of professionals who address different building components in an effort to obtain a complete property condition assessment. The ASTM standard assessment will address the following areas:
- Asphalt / Concrete Pavement
- Drainage and Site Work
- Exterior Wall and Fenestration Systems
- Mechanical, Electrical and Plumbing Systems
- Structural & Foundation Systems
- Roofing System(s)
- Fire / Life / Safety Status in relation to IBC Building Codes
- ADA Compliance
The following is a typical scope of services which may be utilized for most project types. It is PWC’s intentions to deliver a report closely paralleling the ASTM-2018 with additional information for the client’s special customized evaluation report.
- Review of available construction documents
- Visual observation of the buildings and grounds
- Photographic documentation of general conditions
- Report of PWC’s findings and conclusions
- Tabulated analysis for immediate short-term needs
- Capital reserves analysis for 10 -12 year terms
PWC staff will review all available documentation related to maintenance, repairs and replacements of major property components or systems. A visual inspection across the property is conducted in order to familiarize PWC with the general condition of the building(s). In addition, available maintenance records will be analyzed to familiarize PWC with the on-site maintenance concerns and the overall property issues encountered. We will endeavor to interview the on-site staff/maintenance/regional management personnel knowledgeable about the site. The adequacy of design calculations and structural capacity of the property components will be addressed to the extent documents are available and conditions apparent. PWC will review all the major building systems, where possible, during the site survey period. These site systems and a brief description of goals and objectives are noted as follows:
Structural, Foundation and Exterior Wall– The purpose of observing the structures, foundations and exterior walls will be to evaluate the general condition of the structural and window wall systems, documenting any issues or visible defects. We will also attempt to determine the type of systems used and the adequacy of the application. The type, general locations and extent of visible defects in the system will be documented. Design calculations for the structures will be reviewed; to the extent these documents are available.
Mechanical, Electrical and Plumbing (MEP)– The MEP systems will be observed in order to note any defects or deficiencies. The type and extent of visible defects in the MEP systems will be documented. It is assumed that access to the MEP equipment will be provided by site ownership during the inspection period. In addition, PWC will require an on-site maintenance person be present to open all relevant areas such as equipment rooms/electrical panels/HVAC equipment areas as well as other locations concealed within the building(s). Additional formal recommendations in terms of Cap-Ex requirements, to include the potential retrofit costs of outdated R-22 refrigerant systems will be addressed once the initial PCA document is finalized.
Roofing Systems – The roofing systems will be observed by means of a detailed “visual inspection” survey in order to assess its’ general condition and to attempt to determine the type of system used. The type and extent of visible defects and overall maintenance conditions will be documented where access if provided. Additional recommendations in terms of Cap-Ex requirements will be addressed at a later date once the initial PCA is finalized.
Asphalt/Concrete Pavements – The pavements will be observed by means of a “visual inspection” in an effort to attempt to determine the type of pavement applications used at the site as well as the general conditions. The type and extent of visible defects in the pavement system will be documented.
General Site Conditions – General site conditions will be observed by means of a “visual inspection” in order to attempt to determine general conditions of such items as sidewalks, steps, curbs, building/common area lighting, entry gates, landscaping, irrigation, retaining walls, fences, water features, prevailing drainage and slope stability.
Interior of Structures – The purpose of observing the interior of structures will be to evaluate the general condition of readily accessible staircases, corridor/hallways, floors, doors, lighting and fire prevention and safety systems.
Americans with Disabilities Act (ADA) – A general visual site survey of the overall ADA compliance will be performed. PWC will document all observed non-compliance items and attach an associated remediation cost budget. These costs are typically included within the immediate needs section as well as the ADA section of the report. Additional major compliance recommendations in terms of Cap-Ex needs of the project will be addressed at a later date once the initial PCA document is finalized.
CAPITAL ENHANCEMENTS / RECOMMENDATIONS & CONSTRUCTION ADMINISTRATION SERVICES
Pan Western Corporation believes that, in order to provide the Client with the best information possible, we must thoroughly understand your project in terms of the “as is” physical condition.
This would include a PCA Assessment outlining short and long-term physical needs of the project. Once this PCA is completed and the asset better understood, PWC can increase our consultant role and value by making selective and/or global Cap-Ex Enhancement recommendations to assist the client towards enhancing asset value and increasing profitability over the hold period.
PWC is completely independent from other sub-contractors such as asphalt, drainage/landscape, electrical, HVAC, plumbing, roofing, solar panel, siding/stucco/trim and window fenestration providers. Our independent view essentially means that we can offer objective, cost-effective, long-term solutions to existing project needs in a forward thinking manner. We operate from a point of experience, combined with the resources of a nationwide network of qualified sub-contractors, allowing PWC to respond quickly in providing the proper scope of major work requirements and related pricing solutions.
Our Cap-Ex consulting services also include the ability to provide construction administration throughout the entire process. PWC project managers and administrative staff are involved in all phases of the Capital Enhancement Program by understanding the institutional ownerships objectives and executing these to the end of the project for a favorable result.
Manufactures and contractors sometimes assert that they provide services similar to those provided by PWC. Although they will perform various project evaluations of existing systems and conditions, they simply have too much at stake in the outcome of your final decisions to be your only source of information. With the complexity and large expense volumes involved in Cap-Ex Programs today, there is a real need to involve an objective unbiased party in the overall process. PWC’s Consultant Team can help you reduce expenses and frustration by providing practical, cost effective, and appropriate solutions to Cap-Ex Enhancement Programs.
Cap-Ex Administration Services may include:
- Conducting pre-bid and preconstruction meeting to expedite the project
- Establish scopes of work commensurate with project needs and distribute these details to qualified contractors
- Comprehensive review of all bids and product submittals
- Together with institutional ownerships input, make specific contractor recommendations and best fit the goal of the client
- Conducting project “pencil draw” meetings and “draw findings” requests throughout the duration of the project
- Conducting final inspections with the manufacturer’s representatives
- Contract closeout, final lien releases, city approval and sign-offs together with processing applications for payment
Due Diligence & On Site Document Review
As part of Pan Western Corporation full scope services of consulting, PWC offers thorough reviews of architectural drawings and commentary for all types of new and existing construction.
In addition to the aforementioned services, PWC can provide a monthly observation visit to assist in verifying contractor and / or sub-contractor progress during Cap-Ex improvements. This can be performed incrementally or throughout the entire course of the job.
As part of our scope of services we perform the following in order to mitigate the risk associated with the Cap-Ex process:
- Detailed Analysis is performed on submitted plans and specifications to evaluate if these conform to generally accepted construction renovation practices and if the proposed project’s Cap-Ex Budget is sufficient for the renovation of the project under normal conditions.
- Monthly site observations are conducted in order to meet with site staff, verify the completed work is on schedule and identify potential scope deviations and/or problems.
- Written reports are submitted to the Client, Lender and / or Investor with included comments in regards to the scope of work that encompasses the project, the condition of general renovation activities at the site together with the status of any pending change orders that may affect the final outcome of the project.
- If Cap-Ex renovation material is stored at the site or perhaps another location, PWC will notify the contractor and schedule an inspection. Photographs and narratives are used to articulate the work in progress. We strive to evaluate real site renovation progress with scheduled progress and advise as to the impact on the anticipated completion date and overall project costs at final completion.
Identify Potential Problems
- Over advancement of funds
- Poor quality workmanship
- Non-compliance or deviations with Cap-Ex Plans and Specifications.
Site observations are generally performed monthly, in order to evaluate the quality and progress of renovation construction for the purposes of payment(s) and/or substantial compliance with the initial Cap-Ex plans and specifications.
In addition, an opinion is offered regarding the sufficiency of remaining Cap-Ex Funds to complete the targeted goal of the overall renovation project. PWC evaluates real site progress with scheduled progress and advises as to its’ impact on the anticipated completion date together with final Cap-Ex costs at completion. PWC’s function as a representative of the Client, Equity Partner, Lender and/or Investor is to reduce the exposure to potential hazards of renovation construction such as an over advancement of funds, sub-standard workmanship or deviations with plans and specifications. As a way to identify the sufficiency of the global Cap-Ex Budget proceeds to be disbursed, the General Contractor’s AIA payment application is reviewed and compared to the actual work observed. Written reports are submitted with captioned color photos after each site observation for the purpose of verifying the completed work and identifying potential concerns and/or problem areas. In addition, PWC comments as to the status of change orders, stored building materials and general activities at the renovation construction site. Protocol arrangements for funding are designed primarily to accommodate the Client and/or Lender requirements.