Due Diligence
Whitt Consulting Group provides due diligence products for commercial real estate transactions, including a range of environmental and property condition assessments. These assessments are utilized by lenders, property owners, prospective buyers, developers, property managers and attorneys to evaluate the presence or potential for environmental contaminants and the condition of and costs associated with building systems.
Property Condition Assessment
A Property Condition Assessment, or PCA, is a commercial building inspection designed to evaluate a property’s major system components and the costs associated with the deficiencies identified. PCAs utilize ASTM E-2018-15 guidance for conducting the physical site inspection and preparation of the Property Condition Report (PCR). Systems and conditions evaluated in the PCA include site components, foundation, superstructure, interior and exterior finishes, mechanical and electrical systems and regulatory compliance. This evaluation ultimately leads to preparation of a detailed list of immediate repairs and related costs, as well as a capital reserve schedule for repairs and replacements over a specified term.
Whitt Consulting Group can tailor our PCA reports to meet a client’s specific needs or property types. In addition, we have extensive experience performing PCAs for multifamily properties, including those with Fannie Mae or Freddie Mac requirements.
Environmental Assessments
A Phase I Environmental Site Assessment (ESA) is designed to indicate environmental conditions associated with a commercial property. These environmental conditions may impact the value of the property, and are used by lenders and property buyers in their decision-making process and to satisfy the innocent landowner defense under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). The Phase I ESA is governed under ASTM E-1527-13, and includes the following major components:
- Onsite review of the subject property and surrounding properties
- Agency file review of federal, state and local records
- Review of handling practices and records for hazardous materials and petroleum products
- Interviews with personnel familiar with the subject property’s past and current usage
- Review of historical records including fire insurance maps, building permits and city directories
- Review of aerial photographs
- Review of health department, fire department and land title documentation
- Determination of onsite soils, topography and likely groundwater flow direction
WCG also offers a limited Phase I ESA, sometimes called a Transaction Screen, for properties of a low risk nature or with extensive historical information available. A Records Search and Risk Assessment (RSRA) can also be performed on other properties, but does not include an onsite review found in the full Phase I ESA or Transaction Screen, and is limited to a regulatory review and abridged historical review.
Phase I ESAs can also be tailored to meet specific guidance requirements of governmental agencies, including the US Small Business Administration (SBA), Fannie Mae or Freddie Mac. Furthermore, evaluations for asbestos-containing building materials (ACBMs), lead-based paint (LBP), mold, radon, lead in drinking water and other considerations can be added at the client’s request.
Should the Phase I ESA identify a recognized environmental condition (REC), a Phase II Environmental Assessment can be performed to test for the presence of hazardous materials or petroleum products that may potentially be contaminating the subject site. In the Phase II assessment, soils, groundwater, soil vapors or building materials are sampled and tested to determine the extent of the situation and a path forward of next steps.
