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Property Condition Assessments

Partner performs Property Condition Assessments (PCA) and Property Condition Reports (PCR) for lenders and commercial real estate investors. During the Property Condition Assessment, Partner’s architects, engineers, and commercial building inspectors assess the subject property in order to understand the condition of the building. A Property Condition Report is generated discussing each building system and its condition. The most important output of the Property Condition Assessment is the Immediate Repairs Table and the Replacement Reserve Table. This table is provided in the PCR and helps the client understand how the condition of the building will impact the asset’s financial performance.

Property Condition Assessment Reports

CMBS Lenders, insurance lenders, and some portfolio lenders routinely order Property Condition Assessments (PCA), also known as Property Condition Reports (PCR) or Commercial Building Inspections. Partner prepares PCA Reports to meet the requirements of rating agencies such as Standard and Poor’s, as well as to the scope of work defined by ASTM E2018 Standard Guide for Property Condition Assessments: Baseline Property Condition Assessment Process. Partner’s PCA Reports discuss all major building systems and site improvements and include a Replacement Reserve Table and an Immediate Repairs Table. The Immediate Repairs Table identifies capital needs and prices all failing or damaged building systems and life safety issues.

Standards for PCA assessments are published by the ASTM. Standards should be carefully reviewed to fully understand the work to be completed as well as the limitations of reports. In addition, the National Engineering and Environmental Due Diligence Association (NEEDDA) has published a white paper that can provide a useful starting point. The National Engineering and Environmental Due Diligence Association or “NEEDDA” is a 501(c)(6) non-profit organization formed to improve the practice of engineering and environmental due diligence for all stakeholders, members, clients, vendors, and non-member firms. Read the full White Paper here.

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Frequently Asked Questions

A Property Condition Assessment (PCA) report is important for Commercial Real Estate (CRE) because it helps manage risks, supports due diligence, guides budgeting and planning, serves as a negotiation tool, informs capital planning, enhances operational efficiency, instills confidence in stakeholders, facilitates asset management, ensures legal compliance, and fulfills disclosure requirements. It is a critical tool for making informed decisions and managing commercial real estate properties effectively.

A Property Condition Assessment (PCA) report is ordered by one of the following parties in a commercial real estate transaction:

  1. Buyers or Investors: Prospective buyers or investors in commercial real estate often order a PCA as part of their due diligence process. They do this to assess the physical condition of the property and to identify any potential issues or risks before completing the purchase. The findings in the PCA report can influence their decision to proceed with the transaction or negotiate terms with the seller.
  2. Lenders: Lenders providing financing for a commercial real estate transaction may require a PCA to assess the property’s physical condition and confirm that it aligns with their lending criteria. The lender wants to ensure the property is in good condition and its value is not significantly compromised by hidden or deferred maintenance issues.
  3. Property Owners or Sellers: Property owners or sellers sometimes proactively order a PCA report before listing their property for sale. This allows them to address maintenance or repair issues in advance, potentially increasing the property’s marketability and value. It can also help owners understand and disclose the property’s true condition to potential buyers.
  4. Property Managers: Property management companies or asset managers responsible for the ongoing operation and maintenance of commercial properties may order PCAs as part of their asset management strategy. These assessments help plan long-term, budget, and prioritize maintenance and repairs.
  5. Real Estate Developers: Developers considering acquiring a property for redevelopment may order a PCA to understand the site’s existing conditions and structures. This information is essential for determining the feasibility of the redevelopment project.
  6. Tenants: In some cases, tenants looking to lease commercial space may request a PCA as part of their due diligence to ensure that the property meets their specific needs and is in good condition for their intended use.
  7. Partners or Stakeholders: In partnerships or joint ventures involving commercial real estate, one of the stakeholders may order a PCA to assess the property’s condition as part of their risk management and investment evaluation process.

 

  1. Field Work
    • Site Assessment
    • Interviews
    • City Building Department
  2. Building Systems Evaluated
    • HVAC Systems
    • Elevators
    • Plumbing
    • Data and Telephone
    • Boilers
    • Electrical
    • Fire Suppression Systems
  3. Building Evaluation
    • Foundation
    • Structure
    • Roof Diaphragm
    • Interior Finishes
    • Building Envelope
  4. Site Improvements Evaluated
    • Pavement
    • Drainage
    • Signage
    • Lighting
    • ADA Access

Partner also performs Energy Audits in conjunction with Property Condition Assessments in order to identify how energy efficient a building is, and how to increase its efficiency and reduce consumption costs.

  • Commercial Building Inspections in Mexico
  • Fannie Mae and Freddie Mac

Digging Deeper

Equity PCAs

Real Estate Investors are interested in ensuring that their investment is a solid one, with no surprises. Partner tailors our Property Condition Assessments to the asset and the investor’s concerns. Partner can perform extremely thorough building assessments where all major systems are tested and evaluated.

While more thorough evaluations are generally more expensive, Partner often saves our clients money well in excess of our fee by identifying major building deficiencies prior to our client taking ownership.

While our assessors are very knowledgeable, our assessments can be enhanced by our network of specialists. Partner maintains relationships with expert specialists in every building system. The specialist reports can then be folded into our Property Condition Report.

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