Environmental Due Diligence
In connection with all new investment activities, CenterSquare independently or in conjunction with a co-lender, engages the services of a 3rd party professional to complete a Phase I Environmental Site (“Phase I”) Assessment prior to making any new investment. The Phase I is conducted in accordance with ASTM E1527-13 Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process, generally accepted industry standards, and is designed to meet the United States Environmental Protection Agency (USEPA) Standards. In some cases, the Phase I will also address certain ASTM non-scope considerations. These non-scope considerations can include asbestos-containing materials (ACM), radon, lead-based paint (LBP), microbial growth, drinking water quality, flood zones, and wetlands. The purpose of the Phase I is to determine if a particular property contains any Recognized Environmental Conditions (“RECs”) and, if so, indicate what, if any, further investigation may be required to better understand and potentially mitigate those RECs. The phase I includes an environmental records search, a search of the historical uses of the property, and on-site reconnaissance performed by a physically inspection by a trained professional. To the extent the Phase I identifies RECs, further investigation may be conducted through a Phase II which typically involves more invasive testing. Based on the results of the Phase II, CenterSquare may elect to forgo the investment or move forward with the investment but require environmental mitigations to address the REC.
Assessing Climate-Related Physical Risks
In connection with all new investment activities, CenterSquare takes steps to determine if properties are currently located in existing flood zones and, to the extent such a condition is discovered, takes steps in conjunction with a professional 3rd party insurance consultant to ensure adequate insurance coverage is in place to address the risk. Additionally, CenterSquare assesses the coastal risk associated with rising sea levels and incorporates such data into investment decisions.
In connection with all new investment activities, CenterSquare independently or in conjunction with a co-lender, either performs in-house or engages the services of a 3rd party professional to complete a background check on all individuals that control the borrower, partner, or sponsor as well as any individuals or entities that own a significant portion (>25%) of the financial interest of the borrower or General Partner. The scope of the search includes bankruptcy records, civil records and judgements, criminal records, UCC-1 filings, regulatory sanctions, tax liens, and OFAC. To the extent the search uncovers concerning results, the borrower will be asked to provide further detail regarding the event which will be considered in determining if CenterSquare will move forward with the investment. A history of Class A or 1 felonies or crimes and civil judgements involving fraud will, in almost all cases, result in CenterSquare declining to make an investment.