Distressed Commercial Property Due Diligence in Alberta

1. Create an authority ledger

Index every appointment, sale-process, sealing, approval, vesting or other material order with its date and effect. Reconcile the debtor, registered owner, receiver, seller entity and assets being purchased.

Track appeal periods, stays, required notices, approval conditions and any confidential terms through counsel. Do not summarize the process from an old marketing brochure.

• Court and file
• Debtor and owner entities
• Receiver or seller capacity
• Current orders
• Purchased assets
• Approval and closing conditions

2. Build the title and occupancy record

Review current title, plans, instruments, taxes, leases, licences, occupancy, access and service rights. Identify which interests are expected to survive or be addressed by the closing order.

Reconcile rent rolls and lease abstracts to executed documents, amendments, payments, deposits, notices and tenant statements where available. Missing tenant evidence should be identified, not converted into assumed income.

3. Inspect the physical and environmental position

Coordinate inspection access, building condition, capital needs, code and permit records, utilities, security, environmental history, reports and reliance. Record where access is refused or reports cannot be relied upon.

An as-is sale does not make a known defect irrelevant. It changes the buyer's ability to obtain a remedy and therefore changes the diligence, pricing, insurance and financing plan.

4. Reconstruct operations and cash flow

Trace occupancy, rent, recoveries, arrears, concessions, operating expenses, taxes, insurance, utilities, service contracts and capital spending to current records. Separate historical owner distress from property-level performance.

Test a downside period that reflects vacancies, non-payment, missing contracts, deferred work and higher carrying costs. A receiver statement or data-room file can be useful without being an audited representation.

5. Coordinate finance, tax and closing

Lenders may require appraisal, environmental, building, lease, insurance, title and court documents on a compressed schedule. Confirm whether financing is permitted as a condition and whether the lender can meet approval and closing dates.

Have tax advisors address GST, input tax credits, elections, adjustments and asset allocation where relevant. Have counsel reconcile the purchase agreement, title direction and proposed approval and vesting order.

6. Preserve an exceptions and pricing record

For each missing or unresolved item, state the decision owner, deadline, mitigation, cost range and treatment in the offer. Distinguish a verified fact, seller or receiver statement, professional opinion, assumption and unresolved exception.

The final acquisition memo should explain why the price and conditions compensate for the evidence available. Distress alone is not an investment thesis, a valuation method or a substitute for professional advice.