Technical Due Diligence

Structural / Facilities Engineering Analysis

Technical Due Diligence (Tech DD) is the structural and facilities engineering analysis of rental properties and property developments, and comprises:

1. Basic data and documents

  • Matching with information provided by the vendor / also checking for correctness and completeness
  • Gross floor area
  • Letting space Available
  • Room depths and heights
  • Structural calculations
  • Extension
  • Layout of the building and its grounds
  • Planning permission
  • As-built drawings
  • Official approvals
  • Protection of historic buildings and monuments
  • Fire prevention and safety regulations

2. Structural Quality of the Property

  • Stability and resistance of materials (building quality in the narrow sense)
  • Maintenance backlog?
  • In need of modernisation?
  • Improvements
    • Items
    • Extent of planning and costs
    • Building costs
    • Investment period

3. Space Requirements of Users

  • Versatility
  • Adaptability
  • Flexibility
  • Deviation from customary market design standards?

4. Analysis of Rate of Return Based on Building Costs

  • Static calculation of overall return
  • Discounted cash flow method

5. Running Costs

  • Energy and electricity costs
  • Ongoing maintenance costs?

6. Type of Property

  • Office properties
    • Office designs
      • Cellular
      • One cluster room
      • Two cluster rooms
      • Three cluster rooms
      • Open plan / open space
      • Multi-purpose office
    • Air conditioning and ventilation / heating
    • False or hollow floors
    • External solar protection
    • Axial grid
    • Room depth / height
    • Partition walls
    • Fire prevention
    • Development
    • Location and large-scale development
      • Location
      • Distance to the city and airport
      • Public transport and railway access
      • Motorway access
      • Parking spaces
      • Development of the building itself
    • Floor area comparisons
      • Plausibility check gross floor area (GFA)
      • Plausibility check rental square feet (RSF)
      • Evaluation of space efficiency
    • Maintenance requirements / costs
  • Retail
    • Retail real estate
    • Shopping malls and arcades (inner city)
    • Hypermarkets (“green land “)
      • Development (lease of shell)
      • Facilities engineering (interface areas)
  • Commercial Real Estate
  • Logistics real estate
    • Structure
      • Size of factory building: at least 10,000 m2
      • Height of factory building: at least 6.5 m
      • Sufficient floor area, with reserve area
      • Maximum number of loading bays for trucks
      • Rail connection
      • Maximum 10% office area
    • Geographical location and infrastructure
      • Near customer catchment area or near producers
      • Near motorway
      • Near airport (30 min. maximum)
      • Access for international trucks
      • Possibility of 24-hour operation
    • Technical standard
      • Steel or precast reinforced concrete factory building with trapezoidal sheet metal outer walls (insulating panels) and
      • suitable roof
      • Smooth factory floor
      • Full sprinkler system max. volume
  • Residential Real Estate
    • pm
  • Hotels

K.o. criteria

  • Location
  • Uncertainties about floor area(s)
  • Use restrictions
  • Pollutants
  • Agreements with refractory tenants / debtors

Grounds for a purchase price reduction

  • Maintenance backlog
  • Residual pollution / contamination with cap on costs
  • Discrepancies between the floorspace areas
  • Use limitations
    • Storey heights
    • Building depths
    • Axial grids
    • etc.
  • Rate of return and profit rebated easements

Report

The Technical Due Diligence Report (Tech DDR) contains the following outline:

  • Summary of the results
    • Conclusion, including costs
    • Opportunities / threats
    • Essential measures
  • Project data
  • Structural assessment
  • Floor areas
  • Costs
  • Leases and service agreements
  • Building management
  • Maintenance