Real Estate and Facilities

Operations Division

Due Diligence Guidelines

Introduction

About Real Estate Due Diligence

These Due Diligence Guidelines are provided to assist the University System of Georgia (USG) institutions regarding Board of Regents procedures for real estate transactions.

Following these guidelines will facilitate the timely review and comprehensive understanding of real estate transactions that is expected by the Board of Regents and necessitated by our roles as public servants. To that end, the following general comments are made:

  • Consult with the System Office early in the process.
    Consulting with the System Office early in the process is helpful for real estate transactions requiring Board approval and routine real estate transactions, and is essential for non-routine real estate transactions (real estate transactions for which there have been no Due Diligence guidelines established).

  • Submit Proposals through Integrated Review prior to completing due diligence. Most real estate transactions require a project concept proposal to be submitted for integrated review. Due diligence should not be completed or submitted until the proposal has cleared review.

  • Submit complete information.
    The same detailed review is necessary for those real estate transactions that are within the authority delegated to the Chancellor as for those items that require specific Board approval. The intent of the Due Diligence guidelines is to assist the institutions in submitting information that is as complete as possible. Responses should be fully explanatory and not perfunctory.

  • Plan for adequate review time in advance, and for completion of transaction post-approval. Once a complete due diligence package is received, it may take up to 4 weeks for Real Estate & Facilities to thoroughly review all submitted information before the proposed transaction can be placed on a Board agenda or approved within the Vice Chancellor for Facilities’ delegated authority. Similarly, once a transaction is approved, please allow adequate time for the necessary legal assistance to be procured through the Attorney General’s Office and all legal documents researched and prepared. As a rule of thumb, most acquisitions require at least 90 days from time of approval to closing.

  • Annotate standard agreements, when used, to clearly indicate changes made.
    All agreements are reviewed for legal and business adequacy. If the institution negotiated terms differing from those contained in the standard agreement then it is helpful to state this and to provide a redline document highlighting any differences. Additionally, if there are no modifications to the standard agreement, then stating this will also expedite the review.

  • Do not communicate directly with the Attorney General’s Office.
    The Attorney General’s office is tasked with providing legal advice only, not advice on business term issues. When the System Office is circumvented the Attorney General’s Office frequently provides advice on business terms. This advice may be in conflict with Board policy, approval or intent. Not all real estate transactions require specific review by the Attorney General’s Office. The System Office can help facilitate review by the Attorney General’s Office of specific items requiring review. If there is the necessity for direct communication between the institution and the Attorney General’s office, this will be coordinated by the System Office on a case by case basis.

  • Establish a single point of contact for each real estate transaction for the institution.
    All responses to follow-up questions should be focused through a single point of contact for each real estate transaction. Multiple contacts provide conflicting and inconsistent information or information that does not adequately address the issue being raised.

Rental of Real Property as Tenant

Application

This guideline is applicable for proposed rentals of real property when the Board of Regents will be the tenant. This also includes agreements when the Board of Regents will be a sub-tenant. This includes equally leases and rental agreements and is for all such agreements for vacant land, ground leases, improvements to land, buildings and portions of buildings.

Pertinent Board Policy: Section 9.10

Resources: Standard Real Estate Documents

Submittal Guidelines

Request from President to Vice Chancellor for Real Estate and Facilities for rental of real property as tenant that includes all of the following as attachments:

A. Proposed rental agreement (3 executed originals)
B. Copies of all prior rental agreements, including amendments, that this agreement will supercede (if applicable)
C. Color pictures of property
D. Location map
E. Rental Rate Breakdown
F. Rent Comparables (Including private sector comparables)

  1. All University System rentals in the same facility and in the geographic area
  2. All State of Georgia rentals in the same facility and in the geographic area
  3. Private sector rentals in same facility (similar quality and use, and arms length)
  4. Private sector rentals NOT in same facility but in the geographic area (minimum of three of similar quality and use, and arms length)

G. Narrative

  1. Total square footage in facility
  2. Square footage subject to proposed agreement
  3. Term of agreement (start and end of initial period)
  4. Description and justification for all non-standard provisions in agreement
  5. Option periods (number and start and end)
  6. Rent for option periods
  7. Proposed use of the facility
  8. Current location of proposed users
  9. Type of facility
  10. Current rent, if currently rented
  11. Specific source of funds
  12. Justification for rental that address all criteria set forth in the Board’s lease policy.
  13. Analysis of the availability of other suitable space on campus, in University System facilities, or within State owned or leased facilities within the area.
  14. Analysis of availability of other suitable State owned space within the area
  15. Analysis of availability to sub-lease suitable State leased space within the area
  16. Clear and affirmative confirmation that the Board of Regents lease policy has been complied with.
  17. Advantages to institution in leasing property.
  18. Any adverse consequences to institution if property is not leased.
  19. Indicate when the leased premises will be vacated and the event that will permit this to occur.
  20. If the space will be used for academic purposes:
    a. Provide substantiation that the academic programs have been approved for this location
    b. Identify any other institutions providing the same or similar programs in this area
  21. Any additional information that a prudent person would consider to be relevant or important to understanding and considering the request.

Rental of Real Property as Landlord

Application

This guideline is applicable for proposed rentals of real property when the Board of Regents will be the landlord. This includes agreements when the Board of Regents owns the property being rented or when the Board of Regents is itself a tenant and will be sub-renting the property. This includes equally leases and rental agreements and is for all such agreements for vacant land, ground leases, improvements to land, buildings and portions of buildings

Pertinent Board Policy: Section 9.9

Submittal Guidelines

Request from President to Vice Chancellor for Real Estate and Facilities for rental of real property as landlord that includes all of the following as attachments:

A. Proposed rental agreement (3 executed originals)
B. Copies of all prior rental agreements, including amendments, that this agreement will supercede (if applicable)
C. Color pictures of property
D. Location map
E. Rental Rate Breakdown
F. Rent Comparables (Including private sector comparables)
G. Narrative

  1. Total square footage in facility
  2. Square footage subject to proposed agreement
  3. Term of agreement (start and end of initial period)
  4. Description and justification for all non-standard provisions in agreement
  5. Option periods (number and start and end)
  6. Rent for option periods
  7. Proposed use of the facility
  8. Current use of the facility
  9. Location current users will be relocated to
  10. Type of facility
  11. Current rent, if currently rented
  12. Determination if property is no longer advantageously useful to the institution or other units of the University System for the purposes of entering into the proposed agreement
  13. Advantages to the institution in renting the property
  14. Adverse consequences to the institution if the property is not rented
  15. If the building is a Bond funded project, what is the Bond issue.
  16. Any known restrictions, reversions or agreements on property.
  17. Any additional information that a prudent person would consider to be relevant or important to understanding and considering the request.

Acquisition (Including Gifts) of Real Property

Applies to:

Proposed acquisitions associated with the purchase, transfer, and/or exchange of real property.

Pertinent Board Policy: Section 9.8.1

Resources: Standard Real Estate Documents

Submittal Requirements:

Request from President to Vice Chancellor for Real Estate and Facilities to acquire real property that includes all of the following as attachments:

A. Letter request from Institution President to Vice Chancellor for Real Estate and Facilities to acquire real property.

  1. Letter to include acknowledgement that institution will be responsible for all legal costs incurred while completing the transaction.
  2. Costs will be invoiced through the Department of Law.

B. Narrative explanation of proposed acquisition or gift

C. Appraisals of property value (refer to chart Acquisitions Appraisals for details) (One original of each; digital copies preferred)

D. Digital color photos showing the property and surrounding properties

  1. Please clearly label each photo to help orient the viewer (e.g. direction of view, name of land feature or improvement)
  2. Acceptable formats: .JPG, .TIF, .PDF
  3. Pictures of Land: Show land from all general directions, adjacent lands, and any significant land features, An aerial photo may be provided in lieu of a picture, provided that all important features are clearly visible and labeled.
  4. Pictures of Buildings/Improvements:Show exterior view of all significant buildings and improvements on the property from all general directions. If there are more than five (5) significant buildings or improvements on the property, please provide photos of those buildings or improvements that are most representative of the acquisition.

E. Location map

F. Recordable survey

  1. One (1) electronic copy with licensed surveyor signature.
  2. Survey must have been completed within the prior twelve months
  3. “Survey for” block must indicate that the Survey is for and certified to the Board of Regents of the University System of Georgia.

For detailed requirements, see Official Code of Georgia Annotated §15-6-67, Recordation of maps and plats; specifications.

G. Metes and bounds (Microsoft Word format preferred) legal description of the property to be acquired.

H. Phase I Environmental Site Assessment (ESA): An ESA report shall be valid if completed within 180 days prior to the date of acquisition of the property. A digitally signed PDF copy of the report is preferred.

I. Draft purchase option

 

  • Confirm terms and proposed purchase price with seller.
  • If seller requests use of an alternate form, please provide a copy to the System Office for review prior to execution to ensure terms are acceptable.
  • An executed purchase option should not be submitted until all due diligence is complete and has been reviewed by the System Office.

 

For improved properties, the following items are also required:

J. Facilities condition assessment report including all physical improvements

  1. Report must have been completed within prior twelve months

 

K. Hazardous material assessment (Digitally Signed PDF)

L. Copy of Certificate of Occupancy (if reasonably available)

M. Floor plans (if reasonably available)

N. “As-Built” construction documents (if reasonably available, for large improved commercial properties only)

O. Name of developer, architectural firm(s), and construction firm(s) responsible for developing and constructing improvements (if reasonably available, for large improved commercial properties only)

Gifts of Real Property

Application

This guideline is applicable for all proposed donations of real property.

ALL gifts of real property must comply with these guidelines, including gifts within the delegated authority granted to the Presidents by Board Policy.

Pertinent Board Policy: Section 9.8.1

Resources: Standard Real Estate Documents

Submittal Guidelines

Request from President to Vice Chancellor for Real Estate and Facilities to accept gift of real property that includes all of the following as attachments:

A. Appraisal of property value (One original, one electronic/digital version)
B. Phase I Environmental Site Assessment (ESA): An ESA report shall be valid if completed within 180 days prior to the date of acquisition of the property. A digitally signed PDF copy of the report is preferred.
C. Hazardous material assessment (Digitally Signed PDF)
D. Facilities condition analysis of all physical improvements (One original & PDF)
E. Recordable survey (Seven recordable surveys)
F. Legal description
G. Color pictures of property
H. Location map
I. Narrative (in the following numerical outline order)

  1. Size in acres
  2. Description of physical improvements on property
  3. Statement indicating conformance with the institution’s Master Plan, including excerpts from Master Plan indicating conformance
  4. Any known easements, restrictions or reversions on property
  5. Any restrictions or reversions attached to gift by donor
  6. Specific reason owner is offering gift of property
  7. Name of owner and statement that to the best of their knowledge no relationship that might pose a conflict of interest exists between donor and anyone affiliated with the University System
  8. Justification for acceptance of gift of property
  9. Specific proposed use of property
  10. Current location of proposed uses of property
  11. Tax assessment of property value
  12. Any tax liabilities associated with the property. Will the BOR be responsible for any property taxes as the result of the acquisition?
  13. Any other potential tax issues
  14. Operating or capital costs associated with acceptance of gift
  15. Any unusual operating costs as the result of the property acquisition
  16. Expenses that are anticipated as the result of the property acquisition
  17. Will the property produce an income? If so, through what means and what organization and operating unit will gain the benefit from the income? Will unrelated business taxes be an issue? Will there be any significant operating cost resulting from the need to manage the commercial leases? What impacts could occur if the commercial enterprises vacate the premises and the commercial space lies vacant? What percentage of the building is devoted to revenue-producing commercial enterprises?
  18. Any potential liabilities associated with the proposed acquisition, e.g., any unusual potential for accident, loss of revenues, or resultant additional costs?
  19. Any additional information that a prudent person would consider to be relevant or important to understanding and considering the request.

A purchase option should also be provided (purchase price $0). The term of the option should be sufficient to insure adequate time for comprehensive review and all required approvals.

Disposition of Real Property

This guideline is applicable for all proposed dispositions of real property, including sale by any method, transfer of real property (from the Board of Regents) or exchange of real property (for the disposition portion only). For exchange of real property the guidelines for acquisition should also be utilized.

This guideline is not applicable to the proposed disposition of improvements only of real property. For disposition of improvements only the guideline for demolition of facilities should be utilized.

Pertinent Board Policy: Section 9.8.2

Resources: Standard Real Estate Documents

Submittal Guidelines

Request from President to Vice Chancellor for Real Estate and Facilities to dispose of real property that includes all of the following as attachments:

A. Three (3) independent appraisals of property value. (One original each; digital copies preferred)
B. GEPA Environmental Report (If needed, please consult with Real Estate and Facilities before ordering)
C. Recordable survey (Most recent survey of property “if available”)
D. Legal description
E. Location map
F. Color pictures of property
G. Narrative

  1. Size in acres
  2. Description of physical improvements on property.
  3. Statement indicating conformance with institution’s Master Plan, including excerpts from Master Plan indicating conformance.
  4. Any known easements, restrictions or reversions on property
  5. Current use of property
  6. Location that current uses will be relocated to
  7. Reason for disposition
  8. Opposition to disposition by any individual or group
  9. Statement regarding potential use by other system institutions.
  10. Specific proposed use of proceeds
  11. Any additional information that a prudent person would consider to be relevant or important to understanding and considering the request.

Easement

Application

This guideline is applicable for all easements, including the Board of Regents as either Grantor or Grantee of the easement. It is applicable for intergovernmental easements, utility easements, and all easements to or from private parties.

All easements will be non-exclusive easements unless compelling justification is provided for an easement to be an exclusive easement.

Pertinent Board Policy: Section 9.8.3

Resources: Standard Real Estate Documents

Submittal Guidelines

Request from President to Vice Chancellor for Real Estate and Facilities to grant non-exclusive easement that includes all of the following as attachments:

A. GEPA Environmental Report (Two originals)
B. Recordable survey (Six recordable surveys)
C. Legal description
D. Location map
E. Color pictures of easement area
F. Narrative

  1. Grantee or Grantor of easement, including name, contact person, address, telephone number.
  2. Purpose and use of easement
  3. Duration of easement
  4. Benefit to institution of easement
  5. Detriment to institution of easement
  6. Consideration offered for easement, including statement of adequacy of consideration.
  7. Justification for granting of easement
  8. Any known restrictions or reversions on property
  9. Opposition to easement by any individual or group
  10. Any additional information that a prudent person would consider to be relevant or important to understanding and considering the request.

Demolition of Facilities

Application

This guideline is applicable for all proposed demolition and removal of facilities, including demolition by public works contract and institution personnel. Also included is the transfer and relocation of facilities from Board of Regents real property. After approval of a demolition by the Board of Regents, an Executive Order from the Governor must be obtained by the Board of Regents before the demolition can take place. The Georgia Environmental Protection Division (EPD) must be notified 10 working days prior to the demolition regardless of whether asbestos is present. This notification must be submitted through the Georgia EPD Online System (GEOS).

Pertinent Board Policy: Section 9.8.2.3

Submittal Guidelines

Request from President to Vice Chancellor for Real Estate and Facilities for facility demolition that includes all of the following as attachments:

A. Building name and facility inventory number
B. GEPA Evaluation
For improvements deemed historic, the GEPA process for significant resources must be followed.
C. Location map
D. Color pictures of building
E. Firm cost proposal for demolition
F. Hazardous material assessment
G. Narrative (in the following numerical outline order)

  1. Description of building, including size, number of stories, type of construction
  2. Date of construction, acquisition and last renovation
  3. Estimate of current building value
  4. Estimate of repair and renovation cost
  5. Condition of building
  6. Statement indicating conformance with Institution’s Master Plan, including excerpts from Master Plan indicating conformance.
  7. Any known restrictions or reversions on property
  8. Historical significance, or eligibility for historical register, of building
  9. Opposition to demolition by any individual or groups
  10. Current use of property
  11. Location that current uses will be relocated to
  12. Is the proposed demolition pursuant to one of the four criteria contained in Board Policy. If so, which one and explain fully.
  13. Justification for demolition
  14. Specific source of funds for demolition
  15. Proposed use of property after demolition
  16. Cost associated with developing proposed use, including specific source of funding
  17. Any additional information that a prudent person would consider to be relevant or important to understanding and considering the request.