Sourcing and underwriting successful real estate deals
As we look out to 2015, new supply seems to be an increasingly relevant part of the deal due diligence analysis. What are the most important aspects that fund managers are considering when vetting potential acquisitions? In this video, professionals explore changes in the deal underwriting process.
With an unprecedented volume of capital flowing into real estate in 2015, it takes more than a simple track record to source, underwrite and successfully execute on property transactions.
It also takes strong relationships, greater due diligence and plenty of experienced judgment.
Featuring Stuart Taub, partner and northeast regional leader at RSM and dealmakers Steve Coyle of Bentall Kennedy and Gary Rufrano of Clarion, this video briefing examines the takeaways from the video series, “The new rules of real estate deal-making.”
Highlighting tricks they use in sourcing deals, the trio talk about acquisition teams getting early intelligence on potential property deals and how deepening and broadening industry relationships, from operating partners to brokers and advisors, is critical for all employees of an organization.
They also stress the need for greater diligence on tenant quality and new supply in local markets when underwriting transactions, however, as Taub notes, it also comes down to experienced judgment. “Kick the tires on [your] modeling,” he says. “Make sure that [your] assumptions are sound, but at some point, you get to the point where [you] may have to make a judgment of what spread [you] have to put in to win a particular deal.”
It is the exit, though, that makes the deal, and with foreign and high-net-worth investors reshaping the U.S. commercial real estate transaction market, Taub explains how managers should accommodate buyers where price may not be an issue, but where structuring is, and why 2015 is a good time to be a seller.
RSM discusses the increasing demand for regulatory compliance by investors in real estate funds in a new report from PERE.
Provides more time to elect out of 163(j) interest deduction limitation for taxpayers with certain real property or farming businesses.
Real estate funds considering setting up a real estate investment trust should also consider the impact of a REIT on taxable investors.