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Real Estate Due Diligence
Real estate due diligence means the price calculation of real estate conducted when securitization and transactions of real estate and financial DD are executed.
Real estate DD does not calculate the price like the expert valuation in accordance with the standard of real estate appraisal.
Considerable cost occurs when a formal expert valuation is requested. In order to curb cost, real estate DD only carries out a simple price evaluation.
The main examination items of real estate due diligence are listed as below:
- Grasp of the neighboring rental rates
- Grasp of the property transactions of similar cases
- Grasp of the individual factor of evaluated property
- Price calculation
Reference: Methods of real estate appraisal
Methods of real estate appraisal include ①the Cost Approach, ②the Market Data Approach and ③the Income Approach.
The Cost Approach is a method of finding the re-procurement cost of the targeted property at the price point in time (date of record of the judgment of the property price),
making corresponding discount correction and then calculating the estimated price of the targeted property.
The Market Data Approach is a method of calculating the estimated price of the targeted property by collecting many dealings examples, making necessary amendments and modifications
that affect the transaction prices and comparing the prices obtained from comparisons of the regional factors and individual factors respectively.
The Income Approach has direct reduction method and DCF method. Direct reduction method is a method of reducing the net return at intervals of one term by the reduction yield.
On the other hand, DCF method is a method of discounting and summing up the present value of the net return and the return price generated in two or more consecutive periods.
・Strengths of our company
In yenbridge, certified public accountant, licensed tax accountant and real estate appraiser perform evaluations corresponding to various needs including evaluation for reference of transactions and security evaluation. In recent years, particularly due to the revision of accounting standards, there is bigger need in market price valuation of real estate such as asset-impairment accounting and the lease rises.
yenbridge makes the best use of the strength of a CPA firm and the certified tax accountant office to provide one stop service of accounting, taxation and real estate business. By consolidating the real estate evaluation business that has been conducted by separate companies up till now into one, it is possible to achieve significant cost saving.
・About services of Real Estate DD
We carry out real estate due diligence that focuses on real estates (lease office and rental apartment). For the method of evaluation, the Cost Approach and the Income Approach (direct reduction method) are adopted to perform valuation.
Materials required for evaluation
| Reference price | Reference period |
|---|---|
| 50,000 yens/1 item | About one week |
For enquiry
For enquiry and request, please contact us through the enquiry form. Thank you.
Guidance of our one-stop service of accounting and real estate appraisal
1.Bulk loan assessment
By taking both the loan and the price appraisal of real estate into consideration,
our company carries out evaluation procedure of bulk loan as follows.
To judge the overall credibility of debtors by the credit risk analysis. ②Assessment of secured real estate etc.
To carry out valuation of secured real estate. ③Calculation of the share of secured claims
To calculate the share of mortgage and fixed collateral right based on the value of real estate assessed in ②. ④To calculate the recoverable amount of collateral and guarantees other than real estate. ⑤To calculate the amount of claims based on the future cash flow assessed as above.
【Main cases of bulk loan assessment that we have handled】
- Assessment when bulk claim of regional bank is sold off
Classification judgment of debtors, real estate appraisal and evaluation of the amount of secured claims when bulk claim of regional bank is sold off
Amount: About 200 billion yens; Number of debtors: About 200 - Loan assessment when credit bank or credit union is broken down
Assessment of the amount sold to the undertaking financial institution when credit bank or credit union is broken down
Amount: About 800 billion yens; Number of debtors: About 2,000 - Loan assessment when regional bank is acquired
Assessment of possession claim when city bank is merged by the fund
Amount: About 200 billion yens; Number of debtors: About 200
2.Service corresponding to asset-impairment accounting
yenbridge carries out one-stop service to deal with asset-impairment accounting by a team of professionals who are well versed in accounting, taxation and real estate business.
①Grasp of the impaired assets
- Check the impaired assets against "Impairment checklist"
②Grouping of assets
- Simulation of the impairment potential for every grouping of assets
- Offer of "grouping format"
③Signs of impairment
- Judgment of signs of impairment according to the grouping
④Recognition of impairment losses
- Making of cash flow projection
- Offer of format
- Determination of the necessity of recognition of impairment losses
⑤Measurement of impairment losses
- Calculation of recoverable amount
- Offer of reports etc.
- Issuance of written opinion concerning accounting treatment etc.
Reference price and period
| Step | Reference price | Reference period |
|---|---|---|
| The above-mentioned ①～③ | Basic charge 100,000 yens～ | 1～3 weeks |
| The above-mentioned ④ | Basic charge 100,000 yens～ | 1～3 weeks |
| The above-mentioned ⑤ | Brief report: 50,000yens/item～ Written opinion: 100,000 yens～ |
1～2 weeks |
For enquiry
For enquiry and request, please contact us through the enquiry form. Thank you.