Appendix ID: commercial-due-diligence-checklist
Corporate and legal
- [ ] Borrower and owner entities identified
- [ ] Beneficial ownership chart complete
- [ ] Articles, by-laws and corporate profile current
- [ ] Borrowing resolutions complete
- [ ] Shareholder/partnership agreements reviewed where material
- [ ] Litigation and tax claims disclosed
- [ ] Purchase/buyout agreements executed
- [ ] Title search and PINs complete
- [ ] Zoning and legal use confirmed
- [ ] Easements, rights-of-way and restrictions reviewed
- [ ] Existing mortgages, liens and GSA registrations searched
- [ ] Guarantees and ILA requirements identified
Financial
- [ ] Three years borrower financial statements
- [ ] Current interim statements
- [ ] Tax returns/assessments
- [ ] Personal net-worth statements
- [ ] Global debt schedule
- [ ] Bank statements and liquidity
- [ ] Equity contribution trail
- [ ] Sources and uses
- [ ] Projections and assumptions
- [ ] Downside cash-flow scenario
Property operations
- [ ] Current rent roll
- [ ] All material leases/amendments
- [ ] Tenant estoppels where required
- [ ] Deposit and arrears schedule
- [ ] Vacancy history
- [ ] Lease-expiry schedule
- [ ] Tenant concentration
- [ ] Related-party tenants
- [ ] Operating statements
- [ ] Property-tax bills
- [ ] Insurance
- [ ] Utility and service contracts
- [ ] Management agreement
- [ ] Capital-expenditure history and plan
Physical and environmental
- [ ] Commercial appraisal
- [ ] Market rent and cap-rate support
- [ ] Phase I ESA
- [ ] Reliance letter
- [ ] Phase II/remediation where required
- [ ] Building condition assessment
- [ ] Roof/mechanical/elevator reports where material
- [ ] Survey/site plan
- [ ] Fire/life-safety and occupancy evidence
- [ ] Accessibility and municipal work orders
- [ ] Insurance inspection requirements
Loan structure
- [ ] Historical NOI
- [ ] Stabilized NOI
- [ ] DCR at contract terms
- [ ] DCR at lender qualifying terms
- [ ] LTV/LTC
- [ ] Debt yield
- [ ] Amortization and maturity
- [ ] Interest-only period
- [ ] Reserves
- [ ] Covenants
- [ ] Recourse/guarantees
- [ ] Assignment of rents
- [ ] Environmental indemnity
- [ ] Takeout/exit
Closing
- [ ] Commitment accepted
- [ ] Deposit/fees paid
- [ ] Appraisal and environmental reports accepted
- [ ] Lawyer instructed
- [ ] Corporate legal opinions complete
- [ ] Tenant documents complete
- [ ] Insurance binder complete
- [ ] Priority/subordination agreements complete
- [ ] Payout statements current
- [ ] Conditions precedent signed off
- [ ] Post-closing reporting calendar established
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