Property condition assessment

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Rating of property conditions (PCAs) is a due diligence project related to commercial real estate. Property inspections and commercial buildings (also known as the Rating of Property Conditions or PCA) are important for clients who want to know the conditions of property or real estate that they may be purchasing, leasing, financing or just maintenance. Commercial Building Inspectors generally follow the guidelines adopted by the ASTM E2018 industry, the only standards recognized by major lenders. This commercial inspection standard helps commercial building inspectors and clients to understand the agreed scope for inspection including the system or area to be examined, and used as a guide to develop the scope and procedures. Often they are done as part of property transfers and performed in conjunction with the Phase I Environmental Assessment Location.

Depending on the client's needs or risks received, and the type of property, some inspections may require specialist involvement and some may be by more generalist commercial inspectors or building engineers. Of course, each level of different appraisals or assessments will be subject to various fees and time periods.

Upon inspection or Assessment of Asset Condition completed, a written report (also known as a Property Condition Report or PCR) is prepared and delivered to the client within an acceptable period of time. The Property Condition Report may include such things as observed concerns, recommendations for improvement or further inspection, an opinion on possible future and US capital project costs with a Disability Act (ADA) compliance survey.

Experienced commercial building owners, net rental residents, commercial property investors and lenders know the importance and benefits of hiring qualified teams to conduct an Assessment of Property Conditions.

PCAs are not to be confused with an assessment of the condition of the facility, which is similar in nature but serves different purposes.

Video Property condition assessment

History

The PCA process began inaugurated in the early 1990s in response to Resolution Trust Corporation (RTC), and more and more pension fund investors began to be interested in commercial real estate. This becomes the standard operating procedure for obtaining PCA at the time of purchase or refinancing of commercial property. The process of doing PCA starts to become routine and formalized with increasing demand but there are still many inconsistencies. Standard 1995 & amp; The Miskin Guide further defines the process and then in 1999 ASTM released a standard called 2018-99. Since 2000 tremendous growth in the securitization loan market, or commercial mortgage-backed securities, led to a surge in the completion of these reports as they were required to finalize the deal. Furthermore, this has led to progress and convergence on scope, methodology and cost. ASTM 2018-15 is generally accepted in the industry as a current guide to content and practice.

PCA is used by various parties to support their financial modeling of the property. They are intended to be unbiased technical opinions of the impending capital work required on the property, but may reflect ownership-building strategies - for example, long-term building owners such as pension funds may take a different approach to capital projects than owners with a long-term ownership horizon short. PCA writers strive to understand ownership objectives so they can be considered when developing a list of predicted projects.

Individual owners, buyers and tenants also order PCAs for general conditions before renting or buying and after termination of the lease contract for proof of maintenance or return of the required deposit.

Maps Property condition assessment

Coverage

PCA uses building diagnostics to identify the problem, but further diagnostics to determine the solution and predict the outcome for the problem found. PCA covers ten key areas including:

1. Building Sites (Topography, drainage, retaining wall, paving, confinement, lighting)
2. Envelope Building (Windows and Wall)
3. Structural (Foundation and Framing)
4. Interior Elements (Staircase, hallway, common area)
5. Roof System
6. Mechanical System (Heating, Ventilation and Air Conditioning)
7. Pipe
8. Electrical System
9. Vertical Transport (Elevators and escalators)
10. Life Safety, ADA, Code Compliance, Air Quality (Fire Code, Accessibility, Water Disturbance, Clock)
11. Optionally may include site-specific testing, such as infrared thermography for energy loss, air leakage, roof and building humidity intrusions

Location inspection should be a comprehensive and representative picture of the structures and building systems mentioned above. For larger buildings, the general rule is to see 10% of buildings; however, depending on the structure, floor plan and building system, this may not be enough to produce a representative image. The report should include a narrative summary of the type and condition of the building, and a table of short-term and long-term cost costs of building maintenance.

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Value proposition and user

PCA users may include sellers, potential buyers, lenders, investors, or owners.

Reports may be useful for:

• Negotiate the purchase price of the property (buyer)
• Capital or strategic planning (owners)
• Loan approval (lender)
• Triple Net Lease (NNN) (lease/lease)
• Predictive/Preventive Treatment
• Evaluate insurance (owner, insurance agent)

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Cost table

The PCR Executive Summary is effectively a Table of Replacement Cost of Backup. This report may have a length of 20-40 pages but this table summarizes most of the Suspended maintenance items found.

This table may be from 8 years to 40 or even more. Typical tables are 12 years for most CMBS work (loan period plus two years).

At the bottom of the picture you can see that the Unit Cost for this report is $ 20. The property falls into one of two main categories. Either they per unit/bed/pad/room (apartment, hospital, car home park, hotel respectively) or they are done on a square foot (commercial and industrial) {reflist}

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References

http://www.ghaonline.com/CommercialBuildingInspections

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External links

Source of the article : Wikipedia