ASTM International has released changes to E2026 Standard Guide and E2557 Standard Practice, the industry standards for assessing seismic risk to buildings. The changes are expected to improve the consistency of the evaluation of seismic risks during CRE transactions, but may also increase cost and turnaround times for certain seismic risk assessments. Now is an ideal time for property owners, investors, and lenders to re-evaluate their approach to seismic risk assessment and due diligence.
Why Two Standards?
The ASTM E2026 Standard Guide for Seismic Risk Assessment is the broader standard used by more than just real estate investors as it provides a framework for varying levels of the evaluation of the performance of structures (from simple screening at level 0, through complex and costly engineering studies at levels 2 and 3). The ASTM E2557 Practice for Probable Maximum Loss Assessments more narrowly identifies criteria for the evaluation of seismic risks for CRE financial transactions, though customization by the client remains an option.
What Are the Changes?
Changes include the introduction of new definitions; better defined criteria for consultants performing the work; the requirement for more detailed calculations, review of plans and analysis of site seismicity for higher level assessments; and more.
The biggest impact to commercial real estate due diligence will come as a result of changes in the consultant qualification criteria. The revised standard requires that the Assessor responsible for the PML must be a licensed civil or structural engineer, with:
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