DUE DILIGENCE REPORTS | TECHNICAL EVALUATION

The scope of preparation of a due diligence report is determined individually with the client and relates to a specific investment project.

The purpose of the preparation of a technical report may be, among other things:

• verification of the legal status of real estate,
• verification of the possibility of land development in relation to the provisions of the local spatial development plan or decisions on land development conditions,
• analysis of the features of the property’s terrain e.g. in terms of transport possibilities, connection of utilities, prevailing geological conditions
• assessment of those risks which could have an impact on the future value and functionality of the property,
• analysis of possible investment objectives, indication of risks, alternative solutions,
• presentation of the assessment of the investment objectives before purchasing a property,
• verification and assessment of the technical condition of any buildings located on the premises of the given property,
• estimation and presentation of costs of the planned project based on the collected data

TECHNICAL DUE DILIGENCE REPORT

The purchase of a property is a major step in the process of any planned investment. The amounts of transactions frequently exceed millions of zlotys. Therefore, a decision on the purchase of a plot, or a building is not taken overnight. Clients accurately check all the important aspects of the given purchase by commissioning the performance of a specialist audit, which constitutes the technical due diligence report. Detailed preparation of the due diligence report significantly reduces the transaction risk and verifies the assumed profitability of the project.

However, it requires a comprehensive approach and a lot of experience. That is why REACON deals not only with the legal analysis of a given property, but also with its technical, administrative, environmental and economic feasibility. Only detailed verification of all aspects of the existing facility or premises allows for a full view of the situation. On this basis, it is possible to take an appropriate business decision on the purchase or refusal to conclude a transaction, or possibly the negotiation of a more favourable price.

WHEN SHOULD A TECHNICAL DUE DILIGENCE REPORT BE CONDUCTED ON A PROPERTY?

A technical report is usually carried out still before the finalisation of a transaction.  Potential clients wish to know all the strengths and weaknesses of a property before committing significant funds. However, this is not the only time when it is worth having a technical due diligence report. The audit can also be conducted during the use of the property. This way, owners are able to determine the extent and rate of wear-and-tear and uncover any hazards that are not visible to the naked eye. This, in turn, helps to prevent accidents or significantly reduces consequences and ultimately the costs of possible failures.

The prepared technical due diligence report for a property contains analysis of:

• hazards (RedFlag –Short Due Diligence) including risk estimation,
• the legal status of the facility and its premises,
• provisions of the local spatial development plan or decisions on land development conditions,
• terrain characteristics (hydro-geological studies, contaminated land searches, geo-technical conditions, land surveys, inventories of greenery, buildings and networks),
• the transport system and the possibilities for development of the road network,
• the existing technical infrastructure and the possibility of expansion (connections, networks),
• environmental protection conditions, historic buildings,
• investment objectives,
• the technical conditions of existing facilities, technical evaluations,
• costs of the planned project and other conditions agreed and required individually by the client.

The technical due diligence report can be prepared at the request of the current land owner. The study will provide knowledge about the strengths and weaknesses of the property and allow for the taking of action aimed at increasing the value or establishing a realistic sale price.