Third Party Reports

IN THIS GUIDE

Environmental Site Assessment (ESA)

An environmental site assessment is the comprehensive review of an asset’s environmental liability and a report that lenders require during the due diligence period.

Why is the report needed?

Environmental site assessments (ESA) identify environmental concerns. These environmental concerns could require a large investment from the investment group to proceed with the deal. Often, environmental issues could force investors to exit the deal. The environmental report is required for all bridge and commercial deals. This is a crucial assessment as deals can’t proceed until environmental issues are addressed or until the report comes back clean. All parties involved in the deal will need to review the report: lenders, borrowers, investors, developers, insurance.

Phase 1

Phase I of the Environmental Site Assessment (ESA) scheduled site visit, interview with the current property owner, and a review of the properties historical use along with the historical use of the surrounding parcels. These reports take approximately 10-20 business days to complete. Time frame depends on availability, urgency, and difficulty.

Phase 2

Phase II of Environmental Site Assessments (ESA) consist of a more comprehensive study to confirm the presence of hazardous materials such a testing underground storage tanks, building materials, subsurface soil tests, physical sampling of the soil, and subsurface soil tests.

Property Condition Assessment (PCA)

A property condition assessment is a real estate report required by lenders and insurance. The report will cover the present condition of the property and will require a site inspection of around 10% of the units.

Why is the report needed?

Property condition assessments help identify any potential hazards or issues with the property that the lender, borrower, and insurance should be aware of. This report will confirm if the property is in good condition or if it’s not.

Appraisal

An appraisal report will provide a lot of key information for the lenders’ underwriter, investment committee and insurance. Key information such as: net operating income, insurable value, market research, as-is value, as-stabilized value, neighborhood analysis, market rental comparables, market sale comparables, 12-month business income figure, the market value of the property, proforma, and the exterior, interior, and aerial views of the property.

Where can you request a third-party report?

CBRE, Colliers, Newmark

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