|
|
|
|
|
|
|
|
|
Due Diligence in commercial real estate transactions.
The scope, intensity and focus of a due diligence investigation of commercial real estate depends upon the objectives of the party for whom the investigation is conducted. These objectives vary depending upon whether the investigation is conducted on behalf of a buyer, an investor, a developer or a lender. A buyer (or long-term lessee) acquires property for its own use and must verify that the property is suitable for that intended use.
Melanie assists investors in evaluating the expected return on investment generated by the property's income stream. She will consult with financial experts who calculate yield based upon discounted cash-flows rather than the capitalization rate.
In representing developers Melanie understands that they seek to add value by changing the character or use of property - usually with a short-term to intermediate-term exit strategy to dispose of the property. She also understands that a developer may plan to hold property as a long term investment after development or redevelopment. Ms. Hagopian assists her developer clients in determining whether the planned change in character or use can be accomplished in a cost-effective manner by consulting with experts who analyze and forecast market demand.
Ms. Hagopian assists her lender clients in evaluating lending criteria and in structuring loans that are prudent.
The amount of diligent inquiry to be made in investigating a commercial real estate project involves the evaluation of and investigation into three general categories:
THE PROPERTY – On the ground concerns
Exact boundaries, fixtures, rights of others to use the property, environmental contamination, water rights, access, parking, structural condition of improvements, pubic or private sewer system, water supply, availability of utilities, to list a few, and how they affect the intended use of the property.
THE TITLE – Is title good and clear of record, and is it marketable and insurable?
The entire fee title interest including all air rights and subterranean rights, easements, restrictions and liens and how they may affect the intended use of the property. Have all applicable taxes been paid?
APPLICABLE LAWS – How do they affect the intended use of the property?
Zoning, building and health codes, fire codes, Americans with Disabilities Act, applicability of any licenses, all environmental and other permits that may be required.
|
|
|
|
