Fawkner Property carries out the same due diligence that a prudent individual investor would, for a comparable commercial property. Solicitors and consultants are employed where appropriate. The objective of due diligence is to ensure that the property has no latent defects, compare the property to its market peers, ensure that the conveyance is legally effective and to form a basis for a capital expenditure plan to maintain the property to the standard expected by existing and potential tenants.

Technical Due Diligence

Regulatory Compliance

  • Planning zoning compliance
  • Planning permit compliance, including advertising signs
  • Building regulations compliance
  • Disabled persons access, including car spaces
  • Occupational health and safety compliance
  • Fire services maintenance
  • Contamination
  • Hazardous materials

Structure and Services

  • Roofing
  • Drainage
  • Water supply, sewerage and gas, including location of mains connections
  • Structure and external cladding
  • Electrical and mechanical services, including technical manuals
  • Internal floor coverings, painted surfaces, signs and lighting
  • Advertising signs
  • Fire services and evacuation procedures
  • Parking, including number of spaces and state of line marking
  • Landscaping
  • Car park management agreement or lease
  • Security devices and systems
  • Overall suitability for purpose, including peer comparison

Financial matters

  • Location of tenant bonds and bank guarantees
  • Comparison of tenant payments to lease obligations
  • Confirmation of tenant arrears and arrears history
  • Verification of outgoings budget and reality check on total outgoings
  • Inspection of electricity supply agreements
  • Lease make good provisions
  • Lease expiry profile
  • Establish building cost for capital allowance
  • Establish asset register and depreciation allowances
  • Confirm rates and land tax obligations

Conveyancing Due Diligence

Title search and survey

  • Dimensions of the land
  • Restrictions in Crown grant
  • Easements over the land and in favour of the land
  • Restrictive covenants over the land and benefitting the land
  • Statutory agreements over the land and benefitting the land
  • Registered leases
  • Mortgages
  • Charges on the land (unpaid rates or body corporate fees)
  • Check location of buildings near boundaries
  • Check for encroachments
  • Check for adverse possession problems
  • Check survey of tenancy areas

Tenancy review

  • Sight originals of all leases and licences
  • Confirmation of dimensions of premises
  • Evidence of compliance with retail leases legislation
  • Evidence that rent reviews have been completed
  • Inspect correspondence files to confirm lease compliance
  • Inspect correspondence files to discover tenant complaints
  • Clarify obligation of each tenant to pay outgoings
  • Highlight unusual lease obligations or rights, such as exclusivity
  • Review electrical supply agreements
  • Confirm GST clauses in leases
  • Confirm current rent payable
  • Provide summary of major leases for disclosure document

Contract review

  • Review vendor statement (where applicable) and highlight omissions
  • Review contract provided by vendor
  • Confirm precise description of parties and the land
  • Confirm compliance with offer or heads of agreement
  • Ensure GST compliance
  • Confirm stamp duty obligations
  • Confirm settlement and penalty interest provisions
  • Provide summary of contract for inclusion in disclosure document

Valuation due diligence

  • Identification of land
  • Consideration of highest and best use
  • Understand physical and conveyancing due diligence
  • Determine market rent
  • Determine market outgoings
  • Determine cost of filling vacancies
  • Determine market capitalisation and discount rates
  • Market value basis of valuation

Corporate due diligence

Trust Deed

  • Identity of trustee
  • Powers of trustee
  • Remuneration of trustee
  • Unit pricing
  • Trust accounting
  • Distributions
  • Taxation
  • Complaints handling

Disclosure Document

  • Adequacy of disclosure for wholesale investors
  • Summaries of constitution, trust deed and management agreement.
  • Summaries of contract and major leases.
  • Reasonable basis for forward-looking statements
  • Appropriate disclaimers
  • Identification of investors for AMLCTF Act purposes
  • Qualification of wholesale investors
  • Full disclosure of fees and costs
  • Unit pricing policy
  • All significant risks disclosed
  • Compliance with Privacy Act
  • Plain English, with technical terms explained
  • Use of tables and charts
  • Assessment of document as a whole