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Deal Lifecycle

deal-cycle-1

IDENTIFY

STEP 1

deal cycle-1-09SOURCING

  • Leverage broker relationships in target markets
  • Target strategic owners
  • Resource for private owners who are unable to refi and need to sell

deal cycle-1-10PRELIMINARY UNDERWRITING

  • Thoroughly review marketing materials
  • “Scrub” financial model provided by broker

deal cycle-1-11PIPELINE MEETING

  • Present brief review of attractive deals to CEO/Directors
  • Approved deals are assigned a deal number and authorized to pursue

STEP 2

deal cycle-1-12TOUR ASSET

  • Tour of the asset and market
  • Meet with top leasing brokers, property managers, and on-site employees

MARKET LEASING ANALYSIS

  • Develop detailed competitive property analysis
    • Detail vacancy, available suites, asking rates, and product quality
    • Obtain leasing brochures and floor plans for all competitive suitesdeal cycle-1-13
    • Rank subject within the competitive set
      • Define capital necessary to move subject to top of class
  • Obtain lease comparables within the competitive properties
    • Compare these to the leases recently completed at the subject
    • Obtain sale comparables within the market
      • Similar product type, ownership, and vacancy

deal cycle-1-14DETAILED UNDERWRITING

  • Vigorous examination of all financial aspects
    • Stay/go analysis of all in-place tenants rolling in the next 12 months
      • Communicate with on-site leasing brokers as to current tenant status
    • Review property expenses including management requirements
      • Detailed review of on-site personnel and selection of key people
      • Define detailed capital plan for exterior cosmetics, structural and all vacancy units
      • Refine scope with architects and obtain bids from contractors
  • Creation of due diligence binder containing all pertinent information in one location
  • Rendering of capital improvements

STEP 3

 deal cycle-1-15INVESTMENT COMMITTEE

  • Detailed Asset Business Plan is prepared and distributed
  • Formal approval of pricing and return hurdles

deal cycle-1-16INITIAL OFFER

  • Understand key terms/motivation of seller
  • Strive to win on terms, not pricing

DEBT FINANCING

  • Engage debt broker to go to market during offer phasedeal cycle-1-17
  • Receive full approved and vetted debt quotes from lenders
  • Strict adherence to limitations set by the fund such as leverage, recourse, etc

BEST & FINAL OFFER

  • Direct interview between BKM and Sellerdeal cycle-1-18
  • BKM demonstrates its intimate knowledge of the property and its commitment to closing the deal
  • Final push in pricing is made if needed, subject to Investment Committee conquerance

EXECUTE

STEP 4

deal cycle-1-19DETAILED DUE DILIGENCE

  • (Much of the Due Diligence is completed prior to this stage.)
  • Third party contractors are engaged to perform environmental, physical, title, and zoning reports
  • Lender is formally selected and engaged
  • Due diligence checklist is maintained to ensure all necessary documents have been received and reviewed
  • Weekly meetings with all departments for clear communication

deal cycle-1-20ENGAGE LOCAL TEAMS

  • Final interviews and selection of:
  • Property managers
  • Leasing team
  • On-site personnel (as needed)
  • Design and construction teams

deal cycle-1-21CLOSING

  • Prior to releasing the deposit, Investment Committee is informed of any material changes
  • With IC approval, the transaction is closed
  • Seller typically retains liability on representations made for up to a year

deal cycle-1-22TRANSITION

  • Multiple meetings between acquisitions, asset management, finance, and property accounting departments
  • Onboarding of new personnel, teams, and vendors
  • Accounting system is setup
  • New property management office is remodeled
  • Leasing team creates marketing strategy and listing brochures
  • Reimaging work is completed within 60-120 days

STEP 5

deal cycle-1-23OPERATIONS

  • Operations Committee meets quarterly to review assets performance
  • Major decisions (lease/capital/finance/etc) are made
  • Deviations from business plan are reviewed and approved
  • Business Plan execution is driven

deal cycle-1-24DISPOSITION

  • Operations committee runs a hold/sell analysis on an annual basis
  • Those approved for sale are sent to brokers to verify market value
  • Selling broker is selected and the property is fully marketed, reaching as many potential bidders as possible
  • Buyer is selected through a rigorous selection process
  • Verification of funds
  • Favorable purchase terms are negotiated upfront
  • Due diligence is provided by asset management with oversight of acquisitions department
  • Property is closed with minimal trailing liability