Pre-Investment
Due Diligence Services

The Desktop Review is a cost-effective due diligence that allows our Clients to evaluate environmental risk in a cost-effective way, and typically used as an initial screen to determine the potential for environmental liabilities at low-risk Sites. Commonly used in pre-bid situations or for non-industrial leased facilities or in some cases, owned properties with recent environmental reports.

Desktop reviews can be customized to include various sources of information including, regulatory record review for the Site, regulatory record review for the surrounding properties, historical records review, review of environmental questionnaire, interviews with key Site personnel, and allow for a staged diligence approach.

Bridge House Advisors provides a tailored approach for pre-investment due diligence designed to highlight the material risks, as well as value creation opportunities, associated with the environmental, social, and governance (ESG) considerations relevant to a business’s operations. Our deep knowledge of ESG and extensive experience conducting ESG due diligence across industries enables our Clients to make informed, responsible investment decisions and effectively manage ESG risk.

RECENT HIGHLIGHTS

• Established a hybrid pre-investment ESG Due Diligence and post-investment Carbon Footprint scope for a global PE Client seeking to minimize ESG risk, capitalize on ESG opportunity, and understand their go forward exposure to future carbon and climate risk.
• Identified potential vehicle fleet cost savings of $1.7M annually for a business through our pre-investment review of Energy Efficiency. The business was operating a fleet of over 350 vehicles without fuel or efficiency considerations.

The purpose of a Phase I Environmental Site Assessment is to assess whether a property has known or potential environmental contamination from on and/or off-site sources. Bridge House can provide Phase I ESAs in conformance with the scope and limitations of the ASTM International (ASTM) Standard E1527-13; Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process.

RECENT HIGHLIGHTS

• Conducted Phase 1 ESAs and Property Condition Assessments (PCAs) for a 23-site portfolio of specialty restaurants.

The Phase I ESA scope of work is limited to assessing the risk for soil and groundwater contaminant issues. As a practical matter, understanding a business’s license to operate or ability to grow under various environmental regulatory frameworks can be a significant issue. Bridge House can evaluate Environmental Health & Safety regulatory compliance issues in association with common federal, state, and local EHS regulatory programs. In certain cases, regulatory permits require a transfer notification prior to a change of Company name or a change of operational control. Additionally, in some instances, there may be limits in existing permit levels to allow for increased production capacity

Regulatory compliance topics covered can include operating practices regarding air emissions, stormwater and wastewater management, process water management, underground and aboveground storage tanks, spill prevention and control, solid and hazardous waste management, chemical inventory and release reporting requirements, polychlorinated biphenyls (PCBs), asbestos containing material (ACM), hazardous materials management, and health and safety programs. The scope also summarizes recent citations, notices, and/or penalties issued by local, state, and federal regulatory authorities.

RECENT HIGHLIGHTS

• Evaluated operational compliance, remaining useful life, and closure obligations for a private equity investment in a multi-state portfolio of landfills and waste management facilities.

Environmental Reviews provide a more commercial summary of diligence findings at a Corporate level including multiple locations. Components can include site inspection specific findings, desktop reviews of ancillary and/or former locations, potential exposures for off-site disposal risk as well as ESG considerations. The format also allows for a more robust framing of risk and potential mitigation than practical under the prescriptive limitations of the ASTM framework . Since the scope is more expansive than required by the ASTM standard, this work product is readily accepted by the broader structured finance and R&W community.

The scope of a Phase I ESA is to determine if there is a known or potential environmental contamination that may be subject to regulatory scrutiny. The scope does not include the evaluation of potential costs or technical challenges to address the contamination issues. Bridge House professionals have extensive experience mapping out various scenarios including triggers that could lead to discovery and reporting and subsequent regulatory response and requirements. Where applicable, Bridge House would assist in identifying alternative or additional responsible parties and provide support for possible commercial solutions including pre-emptive insurance or protections through various purchase agreement mechanisms. Liability reviews do not necessarily require sampling data; multiple conceptual models using relevant and similar case studies with known costs are typically sufficient.

For evaluating the potential costs of a liability, Bridge House works with the data available prior to selecting a statistical approach; good data with the wrong model can be misleading. As costing evaluations are bespoke, Bridge House clearly outlines all assumptions, equations, and limitations to provide a range of possible and/or potential outcomes; typically including low, probable, and upper range costs. Where appropriate, long term estimates may include Net Present Value considerations.

Bridge House professionals are experienced in establishing and managing balance sheet environmental reserves/provisions in accordance with applicable accounting guidelines including subject to contingent liability rules as outlined by the Financial Accounting Standards Board (FASB) and Generally Accepted Accounting Principles (GAAP) including SOP-96-01 and FAS 5.

Bridge House can also prepare estimates completed under the reporting rules for Asset Retirement Obligations (ARO) as required by FAS 143/FIN47. ARO reporting is based upon “Fair Value Measurement” under FAS 157 techniques which may be met with probably weighted estimates that incorporate multiple scenarios and multiple settlement dates.

Bridge House routinely collaborates with management and counsel before finalizing any financial estimates.

Where an investment includes responsibility for the maintenance and repair of structural and mechanical systems associated with a facility, Bridge House can provide a Property Condition Assessment (PCA) in accordance with the ASTM E2018 Standard Guide for Property Condition Assessments: Baseline Property Condition Assessment Process.

A Property Condition Report includes cost and timing estimates for the Immediate and 10-12 year Replacement Reserve Table to understand and manage future costs.

RECENT HIGHLIGHTS

• Conducted Phase 1 ESAs and Property Condition Assessments (PCAs) for a 7-site high-rise portfolio in Atlanta, Georgia.

The Facility Condition Evaluation (FCE) will assess the current condition of a site and building improvements. It will specifically look for immediate cost items and major capital expenditures that need to be reserved for. The main goal of the FCE is to identify construction defects, facility components with shorter-than-expected lifespan, or poorly maintained systems. Bridge House clients prefer this service when it comes to capital or strategic planning, triple net lease deposit recovery, or predictive/preventive maintenance.

The Facility Sustainability Assessment (FSA) will assess risks related to physical climate change, people, and facility operations. It will also review building systems and improvements, specifically looking for immediate cost savings and major capital expenditures that need to be reserved for. As part of the evaluation of energy efficiency and building system assessments, Bridge House will conduct a limited review of energy usage at the site. This analysis will calculate total energy savings, savings for individual systems, project costs, and return on investment (ROI) for identified energy efficiency projects. The assessment may uncover opportunities for upgrades or improvements that can reduce energy costs and carbon emissions. Additionally, Bridge House will evaluate business continuity risks such as flood risk, water supply, back-up power availability, and physical security.

The primary objective of a Green Property Condition Assessment is focused on identifying opportunities to improve energy efficiency, maximize water efficiency, re-use and recycle materials where practical, and safeguard the indoor air quality of the building. A Green PCA estimates costs using both “traditional” and “green” principles. Green PCAs typically also include an Energy Audit.

Bridge House can support Clients in reducing energy demand and increasing energy efficiencies to maximize asset value and financial performance. Bridge House focusses on providing actionable recommendations for no/low-cost solutions with limited return on investment horizons. As we are not conflicted by trying to sell a ‘product’ Bridge House can creatively support the Client evaluate the pros and cons related to more capital-intensive alternatives.

Passed in 1990, the Americans with Disabilities Act (ADA) is a federal regulation establishing enforceable building standards to accommodate the use by individuals with disabilities. Where a Corporation may have stated policies and commitments that exceed ADA requirements Bridge House can additionally perform this gap analysis.

Bridge House can complete Seismic Loss Evaluation in accordance with the ASTM E2026-16a Standard Guide for Seismic Risk Assessment of Buildings and the ASTM E2557 practice for Probable Maximum Loss/Seismic Risk Assessments. Depending on the level of detail required, there are several levels of effort that can be completed ranging from a review of available documentation to detailed independent engineering analysis.

Bridge House can provide Client-specific, ASTM-compliant, Phase I Environmental Site Assessments for any of your due diligence needs, from refinancing and new loans to real estate acquisitions. Bridge House works with its Clients to ensure in-house and regulatory requirements are met and expectations exceeded.

RECENT HIGHLIGHTS

• Completed 32-Site fuel station portfolio, providing detailed overview of current underground storage tanks, regulatory status, and potential environmental impacts and risks from long- and short-term operations.
• Provided a Phase I ESA of former landfill assisting in determination of historical risk and ongoing liability associated with a potential redevelopment of the property.

Bridge House provides Small Business Administration (SBA) 7(a) Loan Program and SBA 504 Loan Program Records Search with Risk Assessment (RSRA) reports for low-risk properties, allowing a lender to evaluate environmental risk quickly for minimal costs. The RSRA can also be used on non-SBA loans as a screening tool to manage the environmental risk on any property.

Bridge House’s Client-specific, ASTM-compliant, Transaction Screen Assessments (TSA) can provide a cost-effective ASTM-governed due diligence product that allows our Clients to understand the environmental risk on a property while still conducting a Site visit the TSA.

The TSA scope of work includes a Site visit, regulatory records review, interviews with key site personnel, and review of historical records (e.g., aerial photographs, Sanborn Fire Insurance Maps, city directories, etc.).

The Desktop Review is a cost-effective due diligence that allows our Clients to evaluate environmental risk in a cost-effective way, and typically used as an initial screen to determine the potential for environmental liabilities at low-risk Sites.

Desktop reviews can be customized to include various sources of information including, regulatory record review for the Site, regulatory record review for the surrounding properties, historical records review, review of environmental questionnaire, interviews with key Site personnel, and allow for a staged diligence approach.