The reality of the post-COVID capital markets investment preferences continues to reverberate thru the commercial real estate (CRE) vertical, causing many project failures for otherwise promising transactions. Commercial real estate foreclosure alternatives for distressed asset financings become necessary when the project budget no longer provides capital for obtaining capital financing, management (for whatever reason) has decided that it will not pay the advance issuance costs, or the capital base is already facing a default.
The inability to fund the costs of obtaining CRE pre-construction and construction phase financing makes the transaction the highest risk tier capital financing transaction there can be in business. This particular type of distressed asset financing is the hardest to underwrite and obtain investor attention for, as the sponsor is typically not connected to the reality of their circumstances.
The distressed asset financing vertical refers to these deals as “zombies” because the deal and the developer are both dead, but they are the only ones who don’t know it and they keep hanging around making everyone uncomfortable with their attention until they finally die and the deal becomes a “ghost” (take the time to fill out our form and see the value of your transaction and whether you are potentially a zombie or a ghost).
The INVIZEN Platform’s intuitive transaction opportunity valuation system was specifically designed with the realities of complex commercial real estate capital financing transactions at the forefront. The INVIZEN Platform incorporates an end-to-end data logic retrieval system (called “ScenarioBuilder”) that connects the complexities of capital market valuation models into the specific risk profile associated with a specific CRE property or new construction project that is located in a specific market of consumers.
The ScenarioBuilder technology represents a quantum leap forward in creating truly granular investment risk profiles that can be used to “mark to market” every commercial real estate asset located in the 48 states and reflect that resulting risk profile in terms of its unique risk premium (otherwise known as the “promote” by private equity investors). The promote is modeled by the INVIZEN Platform in terms of its relative value to investors in the capital markets based upon the prices of essentially similar assets currently being exchanged. The buyer has no reason to purchase an overpriced asset and the seller has no reason to sell the asset for less than its real “risk-adjusted” value.
The INVIZEN Platform provides these analyses in a real-time or near real-time setting that combines next-gen analytics with a sophisticated processing system that has end-to-end connectivity based upon the ScenarioBuilder technology.
The system can be demonstrated to work because the process is intended to follow the transaction AFTER the money changes hands and monitor the investment for the entire term for the purposes of preventing execution risk failures, default risk failures, market failures, liquidity crisis failures and financial reporting transparency failures. This makes the INVIZEN Platform unique as the legacy systems used in credit and default risk underwriting today can only provide mitigation relief.
Mitigation is a poor substitute for prevention, and the entire purpose of the INVIZEN Platform is the prevention of loss events from becoming realities by providing sufficient advance notice of pending changes in business operating conditions to allow the sponsor and management team to adjust to changing markets, changing technologies and changing cash flow requirements these markets and technologies require.
It starts with transaction screening technologies that eliminate 90% of the work that typically requires the broker-dealer or underwriter up to 6 months to complete. The Verifier Report takes only a business day to complete but is backed up by over 600 pages of Business Intelligence that provides actionable intelligence instead of just data. The Verifier Report is based upon the total INVIZEN Platform output capabilities regarding capacity, collateral, credit and default financial risk underwriting that exceeds CREFC, Basel III and CECL accountability and regulatory expectations.
The Authenticator Report provides the direct inputs of capital markets asset pricing and investment preferences data that is overlaid unto the Verifier Report to provide the important pricing context comparison metrics that serve as actionable intelligence regarding the legitimacy of the screening report’s conclusions.
The First Look Report provides a full and complete market and financial feasibility analysis of the market opportunity, market penetration expectations, competitive set, operating costs, and income-producing capital asset requirements that would attend the transaction. All based upon the surveyed market evidence and the reduction of empirical assumptions in favor of the principles of Rational Choice Theory playing out at all levels and with all participants.
The Final Check Report summarizes the complete underwriting review picture in light of the fact that credit risk and default risk are manageable because only the INVIZEN Platform can provide investors and lenders with the luxury of having the transaction completely underwritten each and every month of the holding period at a fraction of the cost that historically attends these reporting requirements. This is only possible due to the next-gen analytics and unique processing system that attends the INVIZEN Platform.
Find out what it means to you with a call to Rainmaker Analytics today. It’s your future and you can grasp it with confidence.