Shopping centers can present investors with considerable financial reward. To determine whether the retail center you're acquiring or investing in will be successful, insist on a thorough due diligence survey early in the transaction.

This survey, when conducted by a professional architectural, engineering and environmental due diligence consultant, should uncover any hidden risks the property may pose to the financial soundness of your decision.

Due diligence should focus only on transaction details essential to the parties involved so irrelevant information does not create closing delays. To maximize benefits, consider these questions and discuss your responses with your due diligence consultant:

* What is the nature of the transaction? A refinancing loan, acquisition or sale each requires its own perspective by the consultant.

* What is the nature of the lease agreements? Triple net vs. double net, and what do the leases say about maintenance and replacement responsibilities? The answer will be important to the repair and maintenance reserve calculations.

* What is the description of the property? What are the physical parameters of the property? Does any part of the property sit on a ground lease? Are outparcels included or excluded as part of the asset? Are the anchors included in the asset, or are the facilities owned by the anchors themselves?

* What is the tenant mix? Does or has the property included environmentally sensitive tenants such as dry cleaners, printers or auto services? If so, comprehensive environmental studies may be required to determine whether the tenants contributed to environmental liabilities or significantly affected the property's value.

* What is known about the property's history? Make old reports available to your due diligence consultant for research and discussion. Have prior Phase 1 and Phase 2 Environmental Site Assessments been conducted and, if so, what were the findings and recommendations? If the property sits near or includes underground storage tanks or other environmental risks, has there been clean closure that eliminates further risk? What historical maintenance records are available on the major building systems? Do you have projected improvement budgets or quotes? What warranties exist and on what?

* Are there known environmental, architectural, engineering or building code issues? By anticipating these issues up front, your due diligence consultant can deal with them at the time of the due diligence work - not later, when they can cost more and delay closing.

* Will 100 percent of tenant spaces be available? If the property does not have an on-site property manager or maintenance person, who will accompany the due diligence consultant through the property? Do your lease agreements require advanced notice before this survey? Is the roof accessible?

* Is construction, renovation or repair expected? Do you have firm quotes for replacement or improvement of major building systems? Do structural problems exist and, if so, how pervasive and how extensive are they? Your consultant can review plans and comment on the feasibility of construction and renovation.

* Are other parties participating in the transaction? For an acquisition, do you have a lender identified that will have its own due diligence requirements? Are you shopping the loan? Will the architectural, engineering and environmental due diligence consultant assess all the protocols required by all participants? Will the resulting report be accepted and, therefore, portable from one party to the next? Portability helps you avoid the need for multiple due diligence reports and related costs.

* What particular sensitivities exist with the transaction? Are there specific issues, if uncovered, that will cause one or more of the parties to back out of the transaction? Issues might include the discovery of asbestos, past presence of dry cleaners, and immediate or future repairs over a certain dollar threshold. Your consultant can provide an early warning if any of these red flags arise.

A properly conducted engineering, architectural and environmental due diligence survey can help you anticipate risks so you avoid inflated reserves. It also avoids complications and frustrations that can delay a smooth, timely and economical closing.