Institutional Due Diligence

• Track record across at least one full market cycle
• Co-invest / skin-in-the-game commitment and source of equity
• Background, litigation, regulatory, and credit checks (KYC/AML)
• Operating team depth — not a single key-person dependency
• Audited financials of guarantor entities, last 3 years
• Existing lender references and reputation in the market

• Independent third-party appraisal or valuation
• Trailing 12 and 24-month operating statements, normalized
• Forward NOI projection with explicit assumption schedule
• Rent roll / revenue contract analysis with WALT and concentration
• Capex reserve and deferred maintenance reconciliation
• Environmental (Phase I / II) and engineering reports

• Submarket supply pipeline vs. absorption trend
• Comparable transactions — sales and financings — within 24 months
• Demographic, employment, or demand-driver trajectory
• Currency, country, and jurisdictional risk (cross-border deals)
• Sensitivity to base-rate moves and refinancing windows
• Exit liquidity — buyer universe at projected residual value

• Loan-to-value and loan-to-cost vs. peer benchmarks
• DSCR and debt-yield covenants with cure mechanics
• Cash management: lockbox, sweep triggers, reserve waterfalls
• Recourse vs. non-recourse and bad-boy carve-outs
• Prepayment economics — yield maintenance, defeasance, step-down
• Intercreditor terms with mezzanine, preferred, or seller debt

• Break-even occupancy and break-even DSCR
• Stress NOI by −10%, −20%, −30% and re-test covenants
• Stress refinance rate by +200 / +400 bps at maturity
• Cap-rate expansion scenarios on residual value
• Recovery analysis assuming forced sale at 12-month timeline
• Insurance, title, and force-majeure coverage gaps

Closing Discipline

The strongest credit committees treat diligence as a falsification exercise — each section above is a hypothesis that the deal can survive stress. A clean DSCR and a tight spread mean little if Section 05 has not been honestly run.