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Engineering Consulting
Since its founding in 1992, AEI Consultants has performed thousands of engineering assessments on various commercial property types for both private and public clients throughout North America.
AEI works closely with our clients to understand their particular deal requirements. AEI works to ensure the most reliable and thorough reporting. With nearly twenty years of industry experience, AEI has developed a keen understanding of the specific needs and requirements of each lending institution. We pride ourselves on our willingness to work with our clients to deliver a service that meets both lender and client specific scopes of work and report formatting.
AEI’s Engineering Service Offerings include:
- Debt Financing Property Condition-Physical Needs Assessments (PCA/PNA)
- Seismic Risk Analysis utilizing both the SEL and SUL methodolgies
- Green Building Assessments
- Building Energy Performance Assessments/ Energy Star Audits
- LEED Consulting
- Equity-Financing Property Condition Evaluations
AEI provides these services for a myriad of financial institutions including domestic and foreign commercial banks and lenders, mortgage conduits, agency institutions like Freddie Mac, Fannie Mae and HUD, insurance companies, private real-estate companies, investment banks, and individual investors to ensure the underwritten value of a
loan is consistent with the condition of the property at the time of inspection.
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The purpose of a Property Condition Assessment is to observe and report on the physical condition of the subject
property and to provide professional recommendations regarding future issues including financial risk or liability to
the client.
Major structural, electrical, plumbing and HVAC components of each structure, as well as site improvements, are
carefully examined for condition, status of completion, general code conformance, life cycle costs, sufficiency for
their intended use, and extent of defects and depreciation. AEI’s Building Sciences team interviews site personnel,
performs document reviews and conducts walk-through surveys noting the physical condition of the building
systems and components.
Systems surveyed will include the following:
- Site and Grounds - pavement, curbs, loading docks, walks, landscaping, irrigation, site drainage, exterior
lighting, walls, fencing/railings, signage and 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. Condition of soft goods will not be assessed.
- Mechanical Systems - Property-owned electrical, heating ventilation/ air conditioning, plumbing and conveyance systems.
- Safety and Code Compliance - Life safety, fire suppression systems, and general visual review of property compliance to the Americans with Disabilities Act (ADA). AEI services include contacting the local building, zoning, and fire department / authorities to identify any currently outstanding building or fire code violations at the subject property.
Upon completion of the physical assessment of the property, AEI will provide a Property Condition Report (PCR) outlining the systems and components along with any deferred maintenance or deficiencies observed. Based on industry standard, AEI then formulates 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, AEI 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.
AEI’s PCA reports comply with industry standards based on ASTM E-2018-08 requirements along with Freddie Mac,
Fannie Mae or HUD guidelines. Customized scopes are also available.
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AEI provides a seismic risk analysis in a Seismic Loss (SL) report in accordance with ASTM Standards E2026-07 and E2557-07. The SL report summarizes the risk of structural failure due to the vibratory motion from the maximum probable earthquake event that has a 10-percent chance of exceedance in a 50-year exposure period, or a 475-year return period.
AEI utilizes the Scenario Expected Loss Design Basis Earthquake (SELDBE) as the seismic loss damage ratio (commonly referred to as Probable Maximum Loss - PML). (SELDBE) is defined by ASTM E 2026-07 as the expected (mean) earthquake loss to a building resulting from a specified seismic induced ground motion (peak ground acceleration). The specified peak ground acceleration is based on the probabilistic seismic hazard analyses program FRISKSP-3.01b and the USGS
database.The ASTM recently released guidance, ASTM 2557-07, indicating the use of the (SELDBE) estimate for CMBS
transactions.
AEI can also provide the Scenario Upper Loss (SUL), which represents the scenario loss that has a 10% probability of
exceedance due to the specified ground motion of the scenario considered. Both methods take into account various
factors including construction type, site condition, soil type and location of the building to known faults. The specific
methodologies are governed by the lender, but all include the following:
- Cursory review of available geologic and soils reports and drawings.
- Site visit and general assessment of the property, building(s), related facilities and general site characteristics.
- Preliminary assessment of earthquake ground shaking, liquefaction and fault surface rupture potential based on historical regional hazard data.
- Preparation of a report including a list of general seismic deficiencies and preliminary estimate of facility earthquake damage loss based on empirical loss estimation methodologies.
The United States is divided into four seismic zones depending on hazard risk. Properties in seismically active areas have a higher risk of suffering significant damage in the event of a major earthquake. Knowing the seismic risk of your property is important to avoid future expenditures. Please review the map below to determine what seismic zone your property is in.
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The Physical Needs Assessment (PNA) is designed to address all existing conditions,
outstanding maintenance issues and to identify any building code violations.
PNA reports can be modified according to a client’s particular inquiry. Upon completion
of the physical assessment of the property, AEI’s professional staff will provide the client
any recommendations to correct any conditions that may affect the health or safety of
current or future residents. AEI will then formulate and present our recommendations with a
budget to enhance the physical and aesthetic condition of the property to maximize its position
in the market place. The PNA can be an essential tool in determining the subject site value and
approximate cost in possible repairs and/or investment in the property.
AEI’s PNA report provides our clients with an assessment of the subject property’s overall condition and can be modified according to a client's particular inquiry. The report discusses the following components of each site:
- Site and Grounds - pavement, curbs, loading docks, walks, landscaping, irrigation, site drainage, exterior lighting, walls, fencing/railing signage and 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 (FF&E) - Interior finishes of common areas and interior finishes. Condition of soft goods will not be assessed.
- Mechanical, Electrical and Plumbing (MEP) Systems - Property-owned electrical, heating ventilation/ air conditioning, plumbing and conveyance systems.
- Safety and Code Compliance - Life safety, fire suppression systems, and general visual review of property compliance to the Americans with Disabilities Act (ADA). AEI will also contact the local building, zoning, and fire department / authorities to identify any currently outstanding building or fire code violations at the property.
These components are carefully examined for condition, remaining useful life, general code conformance, life cycle costs, sufficiency for their intended use, and extent of defects and depreciation. In addition to a written report discussing the physical assessment of the property, AEI provides immediate/short term cost tables outlining the costs associated with correcting the deficiencies that require immediate attention, mainly code, life safety or ADA deficiencies. AEI also formulates and presents a second set of cost tables which outline the recommendations and costs associated with ongoing maintenance and upkeep over the evaluation (loan) period.
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Green building assessments helps clients estimate the costs and benefits of sustainable investments and determines where to focus these costs in providing the greatest “green” impact.
Building Energy Performance Audits (BEPA)
Based on an increased awareness about energy efficiency and “green” buildings, ASTM International developed the Standard Practice for Building Energy Performance Assessment (BEPA) for a Building
Involved in a Real Estate Transaction (ASTM E2797).
The goal of the BEPA process is to document historical energy performance, identify the range of building
energy use and costs (upper and lower limit scenarios), and provide a pro forma energy use and pro forma energy
cost for the building.
A BEPA Study has five components:
- Site Visits - To observe the building during the walk-through and document the building characteristics (property type,
building age, last major renovation, number of floors, square footage, occupancy, heating system, air conditioning
system, energy sources etc.), conduct interviews and collect records not previously provided.
- Interviews - With the present owner, operator, and/or key site manager at the building
- Records collection - Collect and compile the records necessary (energy consumption, energy costs, weather data, hours of
operation, occupancy rates etc. over the previous three years, with a minimum of one year, or back to the last major
building renovation if completed less than three years ago)
- Records review and analysis - Review and analysis of records collected
- Report - Report on the findings related to building energy use and energy cost.
A BEPA as described in this practice is appropriate for properties where utility/energy costs are centralized and paid by the property owner, manager, or operator and may include, but are not limited to, office, retail, hotel/lodging, warehouse, and industrial properties.
Information collected is standardized in performance metrics kBTU/SF and normalized as appropriate for occupancy, degree days, and other variables. A BEPA can be further expanded utilizing the Energy Star program to allow for benchmarking of the building.
Green Property Condition Assessments
AEI’s team of experienced professionals enables clients to achieve their energy efficiency goals by offering energy performance assessments and energy saving recommendations. Awareness of energy waste will help customers improve the energy performance of their facilities, leading to improvements to the company’s bottom line and ultimately saving significant amounts of energy. These services are provided independently or as a supplemental service to a Property Condition Assessment.
Energy Audits assist clients to optimize energy performance by:
- Determining how energy is being consumed
- Reducing energy consumption and operating cost
- Complying with new laws / regulations*
- Promoting social responsibility by reducing green house gas emissions
- Increasing tenant satisfaction and productivity
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Geotechnical engineering is the branch of civil engineering concerned with the behavior of earth materials. Site investigations are needed to gain an understanding of the area in or on which the engineering will take place and in assessing risks posed by site conditions. Geotechnical investigations include a site examination of soil, rock and seismic faults in the area of interest to determine how they will impact proposed construction.
The American Land Title Association (ALTA) is a national trade association whose active members engage in the title industry and businesses relating to real estate, sales, construction and finance. ALTA and the American Congress on Surveying and Mapping (ACSM) have jointly developed a general set of land surveying standards. The ALTA standards are a nationwide uniform set of standards and the survey often includes determining property lines, location of improvements, identifying all easements, utilities and other conditions affecting the property. An ATLA survey is typically required for commercial development and determines the ownership of a building. The survey is specifically designed to satisfy the needs of lenders, corporations and title companies when dealing with valuable commercial properties.
For construction loans, AEI performs an independent review of construction documents (Architectural, Structural, Landscape, Mechanical, Electrical and Plumbing drawings and related specifications). The purpose of the review is to ascertain if the documents provide sufficient information for a contractor to prepare a thorough and accurate bid, and for construction to proceed with a minimum of cost-adding change orders resulting from missing information. As part of the process, AEI also compares the proposed cost schedule provided by the contractor/developer to costs that are derived from our own
calculations to determine if the proposed construction cost is higher, lower, or on target with the our cost projections. Project
costs are reviewed to determine the adequacy of the projected budget. In addition, AEI reviews the projected construction
schedule provided by the contractor to see if it is realistic or aggressive and if there could be events such as routine inclement
weather or possible labor actions that might affect the projected schedule.
Once the loan is closed and construction has commenced, AEI will perform a monthly walk of the property to confirm that the work has been completed. If any questionable methods or materials are observed they will be reported for further inspection. Any deviations from the project drawings are also noted and reported. AEI also reviews all change orders to verify the validity of the charges.
Construction monitoring is designed to compare the progress of construction work with the project schedule and is conducted through periodic visits to the construction site. More intensive monitoring may occur based on a client’s specific request. The final phase of construction monitoring involves AEI providing the client with a report that includes findings and certification of any costs or project milestones.
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