Commercial Loan Due Diligence
The scope, intensity and focus of due diligence investigations of commercial or industrial real estate are based on our client's objectives. The function of our due diligence is to verify current data, valuation and repayment viability and advise our clients of the risks associated with these loans. Below are but a few of the areas AMC will investigate; AMC also offers customized scope letters upon request.
Summaries
Overall Review
- Rent Rolls
- Property Net Operating Income
- Capitalization Rate
-
Guarantors Reserves
General Documents
- Deed of Trust
- Loan agreement
- Security agreements with related assignments
- Promissory note with intervening assignments
- Intercreditor agreements
- Assumption, Modifications or Written Assurance and Substitution Agreements.
- Loan closing statements. Determine sources/uses and borrower's cash position in property
- Ground leases
- Lock Box or Cash Management agreements
- Title policy with endorsements and riders
- Survey with endorsements
- Assignment of leases with related assignments
- Guaranty Agreements of Mortgagor for non-recourse carve-outs and environmental
- Letters of Credit in place
- Searches (UCC, bankruptcy, etc.)
Insurance
- Environmental insurance policies
- Earthquake insurance
- Property and casualty insurance
- Insurance review
Third Party Reports
- Appraisal and Valuations
- Property condition report
- Environmental reports
- Seismic study
Property
- Operating leases
- Current rent roll
- Retail sales history for 3 years
- Occupancy history for 3 years
- Most recent YTD operating statements
- Most recent calendar year operating statements, with three years of operating history
- For companies occupying 50% or more of a property, the most recent financial statements, analyst reviews and debt ratings (as applicable)
- Property management agreement
- Lease reviews and/or summaries
Sponsor
- Current financial information on guarantors and principals
- Credit reports, FICO scores and background checks for principals
Other
- Servicer report to include payment history, escrow balances, etc.