Institutional due diligence has historically been
comprised of a ratings based approach.
The credit crisis has demonstrated that ratings can be helpful
but cannot be solely relied upon. The credit crisis has further
demonstrated that regardless of the portfolio size, it is
imperative to understand the risks and value of every underlying
asset. Unfortunately, financial institutions continue making the
same mistakes made prior to the credit crisis, making decisions
based on assumptions and sample due diligence. Due to our desire as
a firm to maintain a 100% capital preservation record, our approach
is comprised of underwriting every asset in detail - regardless of
the portfolio size. We also believe in stress-testing the worst
case scenario, in a cost-effective manner.
We conduct the following due diligence measures on behalf of our
clients:
- Customized BPO Appraisal: Analysis of the 30,
60, 90 day fire-sale value and the applicable renovation
costs.
- Encumbrance Report: A separate encumbrance
report on each asset providing a detailed list of any and all
applicable liens, including tax, mechanic and special assessment
liens.
- Loan Documentation Review: Each set of loan
documents are reviewed in detail to ensure the enforceability of
foreclosure.
- Risk Assessment Report: A 70 page risk
assessment report analyzing the risks associated with the asset,
the borrower, the location, regional trends, employment, etc.
- Chinese Dry Wall Inspection: For properties
constructed from 2003 onwards, we require that an on-site
inspection be conducted to ensure that the dry wall is not Chinese
dry wall.
- Financial Model: we employ a sophisticated
analysis to assess the portfolio's worst and best case scenarios,
based on the purchaser's investment objectives.
To learn more about BridgePoint's Due Diligence
Process, click here