Realogic Underwrites $250 Million Non-Performing Loan Portfolio For Global Private Equity Firm
Business Challenge
The commercial real estate operations platform for a leading global private equity firm leveraged Realogic to perform full underwriting on a $250 million non-performing loan portfolio. Time was of the essence to complete the following tasks:
- Performing onsite commercial property inspections for each asset in the non-performing loan portfolio.
- Conducting market research using leading commercial real estate industry sources to determine sales and rent comparables, as well as market expenses and growth rates.
- Creating Argus models for each distressed asset.
- Building a proprietary underwriting workbook and modeling the commercial assets within.
- Presenting underwriting findings to the private equity firm’s investment committee.
Non-Performing Loan Underwriting
Over our 30+ year history, Realogic has underwritten hundreds of non-performing loans and distressed commercial real estate assets. Regardless of the underwriting assignment, our approach is consistent and meticulous:
Discovery and Engagement
During the Discovery phase, Realogic met with key company executives to understand the asset types, scope of underwriting services needed, timeline, and final deliverable.
Site Inspections
After engagement, Realogic worked with seller’s broker to schedule site inspections for each of the distressed assets. Realogic’s commercial real estate underwriters toured the properties with seller’s broker and onsite management and documented and photographed the property’s condition and uses and toured the neighborhood to learn more about the asset’s competitive set. Our findings were documented in our comprehensive site inspection form as well as several sections of the underwriting workbook.
Market Research
During the site inspections, Realogic’s team took advantage of the time spent with seller’s broker to inquire about:
- Market trends
- Rental rates
- Expenses
- Occupancy
- Sales comparables
Financial Modeling
Realogic built full Argus models for each of the distressed assets in the portfolio. The sources used to create the Argus models included:
- Seller’s rent roll
- Property budget
- Capital expenditure projections
- Market rates as determined during the Market Research phase
Underwriting Workbook
Realogic completed its underwriting in the underwriting workbook, which included:
- Realogic’s site inspection findings and photos
- Local and regional maps and market commentary
- Sales comparison
- The Argus 10-year cash flow
- Historical expense, capital and tax trends
- Cap and discount rate matrices
- Ultimate underwritten valuation
Presentation of Findings
Realogic participated in client’s investment committee meeting to detail our underwriting valuations on an asset-by-asset basis. Realogic’s underwriting team answered our client’s questions about the asset, neighborhood, region, market comparables and underwriting assumptions. Our physical deliverables included the site inspection forms, Argus models and underwriting workbooks.
Results
Realogic’s assistance allowed our client to place a competitive, winning bid for the portfolio. We’ve been proud to grow the relationship with our client and assist in the successful underwriting of several more NPL portfolios over the following years.
“Realogic’s commercial real estate consulting team has been an invaluable partner for nearly a decade. We trust that their experienced staff will get the job done in the tight timeframes we require.”— SVP of Acquisitions
More On Non-Performing Loans and Distressed CRE Assets
If you’d like more information on Realogic’s commercial real estate underwriting services, including for non-performing loans and distressed assets, visit the underwriting page on our website.
For more information about our lease administration services for distressed commercial real estate properties, visit the lease administration page on our website.
Or, feel free to contact us at info@realogicinc.com or 312-782-7325