Due Diligence
After Milan’s initial underwriting results in an interest to purchase a property, and a successful negotiation has led to favorable terms for the purchase, our acquisition department engages in due diligence. The following is a summary list of the due diligence responsibilities Milan assumes for itself when acting as the agent for the principals of Milan and outside clients as partners:
- Review all title records and surveys
- Evaluate all financial documents including historical and projected operating statements and budgets, billing worksheets and general ledgers, and expense breakdowns and recaptures
- Complete examination and abstracting of all leases and license agreements
- Study all vendor contracts and expenses of the property
- Review of all structural, mechanical, and other physical elements of a property, either through a property condition assessment report, or inspections performed by our Property Management department’s repair and replacement vendors, or sometimes through both means
- Examine all environmental, geotechnical, hydrological, and other reports affecting the site
- Evaluate all CC&Rs and other governing documents for the site
- Review all loan documents if affecting the process of the purchase
- Generate financial models usually utilizing the Argus discounted cash flow program, illustrating the return expectations for the asset along with parameters and assumptions for those returns
- Provide additional due diligence analysis complete with opportunities, risks, game plans and strategy
Additionally, Milan takes the initiative in performing tenant interviews, strategizing with well-respected leasing agents, and maintaining constant contact with the seller’s representatives to assure that we are on top of the most up-to-date information regarding the income and expenses for the property.
During the underwriting and due diligence stage of the acquisition, there are critical times for a recommendation on whether to purchase, further negotiate with sellers, or elect to discontinue the acquisition. This is where general “due diligence” companies fall short. With the experience we have in acquiring a wide spectrum of assets, Milan’s acquisition team stands behind its recommendations with equity in every deal.
Closing
Milan’s acquisitions team members bring to the table years of experience in negotiating the purchase and sale of commercial assets. Milan has a remarkable record of moving quickly through due diligence and generating concrete evidence for its principals, its clients, and also the sellers that bring all parties to a reasonable conclusion regarding the financial and physical aspects of a property. Thorough analysis and complete evaluations of assets have been very effective in Milan’s years of acquisition negotiations.
