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CHECK UP – PCAs CAN PROTECT AGAINST DEAL-KILLERS

Property Condition Assessment Reports (PCAs) provide a return on investment (ROI) that many equity investors might overlook.  PCAs yield ROI in three ways: protect buyers from bad purchases; provide buyers with information for price negotiations with sellers; and find opportunities to improve building value post-purchase.

As noted in the article; “Not all PCAs are the same. The property condition scope outlined in ASTM E2018 is a very flexible standard. The ASTM PCA is a walk-through assessment where a knowledgeable architect, engineer, or building inspector walks through the asset, interviews available personnel, reviews available records, and evaluates the condition of all building systems. For large assets and clients with lower risk tolerance, an engineering assessment firm can upgrade the inspection by bringing in a specialist such as an elevator inspector or an engineer who is trained in mechanical, electrical, structural, or plumbing systems. While this increases the investigation’s cost and depth, property owners who regularly order equity PCAs should experience greater ROI.”

PCA reports can vary widely in scope and can be used by an investor or potential purchaser to accomplish specific goals.  For example, a PCA can either a) determine that a significant enough issue exists, such as improper installation of exterior insulation finish systems and resulting moisture concerns, and convince a buyer the deal isn’t worth doing, or b) identify significant issues but that can be negotiated between buyer and seller, such as isolated areas of water intrusion in a membrane roofing system, or c) add an energy benchmarking or auditing scope for value-add investment opportunities, resulting in a reduced Net Operating Income (NOI) and increased property value.  Equity PCAs can accomplish different goals for investors, making it important for a consultant to identify the specific needs of investors and to design an equity PCA that meets those specific needs.

For full article: ROI Check Up

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