Property Condition and Physical Needs Assessments

Based on ASTM 2018 for baseline property condition assessments, CNN observes and reports on the physical condition of a given property and provides professional recommendations for immediate and reserve needs regarding future projected issues for repairs and replacements of the components of the building. The following systems are observed during a walk through:

Site

Pavement & curbing, loading docks, landscaping & drainage, exterior lighting, fencing & walls, signage & exterior amenities.

Structural Systems

Foundations and structural framing of walls, columns, intermediate floors and roofs.

Building Envelope

Roofing systems, exterior finishes, stairs and steps, exterior doors and windows.

Interior Building Components

Interior finishes of common areas and tenant areas.

Mechanical Systems

Property-owned electrical, heating ventilation/air conditioning, plumbing and conveyance systems.

Safety and Code Compliance

Life safety systems, and general visual review of property compliance to the Americans with Disabilities Act (ADA). In addition, we contact the local building, zoning, and fire department/authorities having jurisdiction to identify any currently outstanding building or fire code violations at the subject property.

Upon completion of the physical property condition assessment, CNN will provide a Property Condition Report (PCR) describing the systems and components of the Subject along with any deferred maintenance or immediate deficiencies observed. Based on industry standard, CNN then compiles a list of immediate repairs and costs that will be incurred during the life of a loan. Immediate repairs can be defined as significant building code violations, fire code violations, safety concerns and deterioration to the building caused by deferred maintenance. In addition to the assessment, CNN develops a Modified Capital Reserves Schedule that approximates repairs and replacement costs most likely to occur over the evaluation period. This schedule allows the client to plan for large expenditures in advance of their replacement. Customized reports are available. We also have the ability to bring in specialty contractors to evaluate systems further.

Construction Loan Monitoring (CLM)

Construction Loan Monitoring is done in conjunction with the general contractor’s pay application request prior to any disbursement. A physical site inspection is performed to independently verify the percentage of completion of the proposed construction being performed during the draw request period. The scope of our CPM includes the following:

• Site Visit

CLM includes a site visit to observe the construction work in progress, the overall visual quality of the work performed and a review of the current pay application submitted. Site visits are typically performed on a monthly basis or other frequencies requested by the client. CNN observes construction methods, systems, and materials in place. Should materials be stored off site, a separate inspection may be required and can be performed at the request of the client. The site visit typically includes an interview with the on-site construction superintendent to discuss construction progress, percentage of work completed, change orders, and the future schedules for completion.

• Pay Application Review

As part of the CLM process, CNN will review the progress of construction and the payment application for uniformity and overall appropriateness. We will review the construction draw requests from the contractor and developer and ascertain if the work for which funds are requested have been completed. We will review conformance of the payment application with the provisions of the construction contract and plans and assess the overall completeness of the work. The level of project completion will be reviewed as well as the status and inventory of materials stored on and off site. When change orders arise, we will disclose all pending and executed change orders and verifiable budget overruns. If necessary, CNN can review and comment on any shared information from municipality or other inspections, such as plans, permits, and final inspection. We will keep the client up to date on the overall level of completion, report any potential changes to the expected completion and determine if the contractor is in conformance with the construction schedule. Finally, CNN will comment on whether pay application invoices are accompanied by necessary conditional and unconditional lien releases.

• Construction Loan Monitoring Report

At the completion of the project, the client will receive a complete and concise report summarizing site observations, interviews and review of payment related documents. CNN will offer an opinion as to the appropriateness of the draw request or payment application.

Phase I Environmental Site Assessments (ESA)

Phase I Environmental Site Assessments are an integral part of the due diligence and decision-making process for lending and property purchase decisions. A Phase I Environmental Site Assessments includes a site visit and a historical and regulatory review that is designed to identify environmental issues such as current and historic environmental conditions that may affect property values, pose a financial liability to the purchaser or lender, or affect the ability of a borrower to repay a loan obligation. clients may also obtain a Phase I Environmental Site Assessments in order to satisfy requirements of the “innocent landowner defense” or other available defenses to environmental liability under CERCLA. Phase I Environmental Site Assessments (ESA) from CNN meet the most current ASTM Standard for Phase I Environmental Site Assessments, and involves the following activities:

Site Inspection

• Adjacent/surrounding reconnaissance
• A review of historical documentation (i.e. fire insurance maps, city directories and aerial photographs)
• A review of hazardous material and petroleum product storage, spill and disposal records
• Local, regional and state agency file review
• Interviews with the property owner, tenants and property managers
• A preparation of a report documenting the findings, conclusions and recommendations
• Asbestos, lead and mold evaluation (added service)
• Reports from CNN are designed to be clear and concise. Our Phase I Environmental Site Assessment (ESA) reports are an essential part to many commercial and industrial real estate transactions and are conducted in accordance with the most current ASTM E 1527 Standard Practice for Environmental Site Assessments

Additions to our Phase I Environmental Site Assessments reports can include:

• Wetlands review
• Flood Zone
• Evaluation for mold, asbestos, lead-based paint, and/or radon

Phase II Environmental Site Assessment

When environmental due diligence goes beyond the scope of a Phase I Environmental Site Assessment, a Phase II Subsurface Investigation can be necessary to further evaluate the potential of contamination on your property. CNN provides Phase II Subsurface Investigations for clients nationwide.

CNN’s Phase II Investigations may include:

• Soil and groundwater sampling and laboratory analysis for potentially harmful chemicals
• Sediment and surface water sampling and analysis
• Soil vapor and indoor air sampling and laboratory analysis
• Groundwater flow modeling and laboratory analysis
• Drilling and sampling temporary bore holes
• Installation and sampling monitoring wells
• Geophysical surveys
• Indoor-air vapor intrusion assessment
• Vapor encroachment assessment
• Contaminant source differentiation

Once the field investigation has been completed, a state-certified laboratory will conduct the sample analysis.