Realogic Finds $4 Million Closing Credit
The buyer of a 650,000 square foot office building asked Realogic to abstract 110 leases, compare the results to existing valuation-DCF files and to present all reconciling items to the buyer to negotiate potential credits at closing.
Realogic discovered and documented 55 reconciling items, then conducted a sensitivity analysis on them at our client’s request. Realogic’s work uncovered $4 million of free rent for an anchor tenant that was not included in the original model of the building.
$3 Million “Hit”
A property manager discovered that the letter of credit documentation for a newly assigned property was deficient. The property’s previous owner/manager had allowed a large letter of credit to expire, which was missed during the due diligence process. The tenant eventually defaulted, costing the building $3 million.
To help prevent future defaults and losses, Realogic began to more carefully administer the building’s leases and added letter of credit tracking to the lease administration process. As a result, the expiration dates for all tenant letters of credit are now documented and closely monitored, and the property manager routinely receives an updated critical dates report.
FDIC Portfolio Due Diligence and Underwriting
A top private equity fund needed due-diligence done on a cross section of a large FDIC pool. The fund was bidding to participate in an FDIC structured sale. The portfolio consisted of both performing and non-performing loans in all asset classes for properties located across the country. The client needed due-diligence done on approximately 150 of the loans, most originated by small to medium-sized banks.
Armed with limited information, Realogic performed site inspections on 60 of the 150 properties. Next, we reviewed the contents of the loan files to determine the loans’ default status, DPO probability and amount, cross collateralization with other properties and other critical information. We then reviewed rent rolls and historic financial information, gathered intelligence to determine property occupancy and current asking rents and compiled market data, such as market rent and occupancy. Based upon our findings, we generated in-place and stabilized values for each property. Finally, we delivered an asset summary and site inspection package for each property, including cash flows, maps, photos and all market data.
Lease Administration For 50 Million Square Feet of Property
Realogic’s client needed their financial and non-financial lease information organized in a concise, easy to use format to help them make sound decisions and retain tenants.
Realogic used leading CRE software to administer leases for the client on an on-going basis. Critical data, including key financials, options and encumbrances dates, termination rights and color stacking plans, is now shared continuously with the client’s property and asset managers, owners, leasing agents, property accountants and lenders.
2,000 Tenant Oracle® Import
The owner of a portfolio of special-use assets requested a valuation-DCF run to help evaluate a joint venture proposal from an investment banking firm. The client needed the work completed within seven business days.
First, Realogic confirmed the assumptions that were required. Next, we mapped and imported the appropriate data fields from Oracle® into a valuation-DCF software product. We conducted a detailed review of the imported data to assure that it was accurate. Finally, we conducted a sensitivity analysis using one of our proprietary software products. In just four days, Realogic delivered a complete, accurate 2,000 tenant files to the client.
Realogic Straight Lines 5 Years of Rental LLCome
A client was going public and needed to straight line their rental income for the previous 5 years. Their portfolio consisted of nearly 20 million square feet of property and over 2,500 tenant records. Each asset required a three to five year analysis, depending on the acquisition date.
Realogic created a customized Excel® model to calculate the straight line rental revenue and adjustment amount at the tenant level, with building level aggregation. Realogic then used historical rental rolls to prepare tenant rosters for each building to determine its occupancy over the previous five years. After the initial setup, Realogic worked with the client’s accounting firm to audit the results and resolve any discrepancies to comply with standard accounting guidelines.
The Opportunity Zone program was launched by the Federal Government as a means of spurring investment in commercial real estate in economically disadvantaged areas of the country. Investing in real estate projects in Qualified Opportunity Zones, or QOZs, offers a variety of enticing tax benefits, including:
- An immediate partial deferment of taxes on capital gains that are re-invested in Opportunity Zones
- A complete waiver of taxes on capital invested through the Opportunity Zone program
- Solid, stable long-term returns on investment
- Bringing new, affordable housing and retail, office and industrial space to the underprivileged areas that need them the most
This powerful combination of significant economic and altruistic benefits has generated enormous interest in Opportunity Zones and Qualified Opportunity Zone Funds from commercial real estate developers, investors, owners and fund managers.
Realogic has been at the forefront of Opportunity Zone development and investment analysis since the QOZ program’s inception. Since that time, we’ve been directly involved in a wide range of Opportunity Zone projects and worked with numerous Opportunity Zone leaders, including investors, developers and even policy makers. We’ve gained a tremendous amount of knowledge and hands-on experience with Opportunity Zones in just a short time.
But really, our relevant experience and project work go back much further. For nearly 30 years, we’ve been laying the foundation to be an indispensable resource for anyone doing work with Opportunity Zones today. We’ve been building, sharpening and refining the right tools, like our Excel-based proforma development models; acquiring indispensable skills, knowledge and expertise in all aspects of commercial real estate development, investment and fund management; and we’ve been hiring and training the right people to provide the services, support and insights our clients from across the commercial real estate spectrum want and need. As a result, our tools, methods, processes and resources are all tested, proven and unmatched by anyone in the commercial real estate industry.
In short, however you’re involved with Opportunity Zones- development, fund creation, fund management or asset management- the team at Realogic has the right skills, resources, experience and Opportunity Zone and commercial real estate expertise to help you achieve your objectives.
Realogic offers a range of essential solutions, services and insights to help commercial real estate developers, owners, funds and fund managers reduce their expenses and gain access to specific skills, tools and expertise to help maximize the returns on their Opportunity Zone projects. By design, our solutions, services and insights are intended to be used singularly or in combination, and we work with our clients to determine the optimal balance. As your fund or project progresses from conception to completion, we can add value throughout the Opportunity Zone cycle.
Our proven, propriety development, asset management and fund-tracking models have grown and been tested since the inception of our firm nearly 30 years ago, and they’ve been used as the foundation for thousands of successful, profitable commercial real estate projects. We offer flexible models for a wide range of ground-up development, asset management and fund management projects, including:
Accurate and comprehensive, our models can be used individually or in combination for more complex projects involving mixed-use development or funds with varying focuses. Since our models are in Excel, the formulas are transparent so that you can see exactly how numbers are calculated. Plus, for anyone with even modest Excel skills, changing variables and sensitizing data is fast and easy.
Our experienced team of commercial real estate professionals can help with your Opportunity Zone projects however you need, whenever you need. We can assist with simple yet important tasks, like modeling your proposed and existing deals or auditing the results of your partners’ projects for accuracy. We can supplement your own resources by providing a specific expertise that you may be missing or lacking scale, like advanced financial analysis or underwriting support. We can also do more advanced work, like converting, standardizing, and identifying and correcting errors in the models you receive from outside, making it much faster and easier to review, analyze and consider development or investment proposals and decisions. Working with Realogic also helps you minimize costs by allowing you to outsource rather than add full-time staff or purchase technology or other critical resources.
OZ Platform Perspective
Combine it all – our proven models; our skilled, experienced people; our established systems and processes; our commercial real estate and Opportunity Zone expertise – and you have the Realogic OZ platform, an invaluable resource for anyone looking for more holistic help with their Opportunity Zone program. You can leverage any or all of our resources to plan, architect, build and manage any modeling aspect of your Opportunity Zone program.
Realogic gives you peace of mind and allows you to focus on what you do best. Since our OZ platform is flexible and scalable, the combination of services we provide can evolve as your project or fund grows and evolves, ensuring you have the long-term support you need to sustain your success.