DST-structured commercial real estate income-producing properties (and other 1031-exchange vehicles) placement offerings place a heavy burden on due diligence disclosure by the sponsor/promoter and require independent verification of all materially-significant matters. DST market and financial due diligence reviews, as well as underwriting analyses that focus only on the issues at the time of funding are a thing of the past due to the compliance requirements we now face in the CRE finance industry (Rainmaker Analytics is listed in the FINRA Compliance Vendor Directory). The need is for real-time, proactive due diligence that goes beyond the funding event to proactively manage investment loss severity risk that accompanies commercial real estate investments for the full term of the investment holding period in a real-time environment.
For developers, sponsors, promoters, investors, lenders, broker-dealers, registered investment advisors, owner/operators and other key commercial real estate participants, the due diligence burden on commercial real estate private placement offerings is not just a burden, it can become a web of future investment fraud claims that can become unmanageable as the requirements do not end with funding the transaction. FINRA, buy-side broker-dealers and liability insurance carriers are particularly exposed to future loss risk due to investment fraud claims stemming from a lack of due diligence disclosures. The result has been telling: a restriction has been placed on capital financing access for commercial real estate ADC projects and commercial real estate private placement offerings are becoming even riskier as a result. The INVIZEN approach applies to both the buy-side (those seeking capital financing and underwriting the requests) and the sell-side (those investing or lending capital and underwriting these funding requests) of the commercial real estate private placement offerings spectrum including multifamily housing, senior housing, commercial office, light industrial, NNN single-tenant, retail, mixed-use, hospitality and other property types. INVIZEN offers an underwriting review process that includes business management issues (i.e.: execution risk management), market issues and financial investment performance issues. The INVIZEN Real-Time Status (RTS) Asset Care Protection Program combines the following key benefits that are certain to be discussion topics regarding every DST due diligence review:
- Ongoing due diligence documentation for the full term of the investment holding period or loan term, as the case may be.
- Advance warnings of market events that could lead to investment losses (changes in current and/or future competition); and
- Mitigation program options to prevent potential future loss events from becoming potential future loss realities (strategies, programs, and alternative development use recommendations). INVIZEN supports the project and the participants the entire way with our exclusive suite of business planning services specifically designed to proactively manage execution risk because the budgets, goals and owner requirements are automatically updated and transmitted down to the line employee level through every level of management that includes tasking, productivity measurement and automated reporting. What does your due diligence program have? and
- Reduction in liability insurance costs due to reducing the potential for investment fraud claims; and
- Increased access to market opportunities to participate in more DST transactions on the sell-side or buy-side (i.e: reduction of long-term investment fraud claims risk exposure thus allowing participation in more CRE and alternative investment transactions).
INVIZEN offers an end-to-end solution that operates in a systemic, proactive manner within the real-time envelope to underwrite commercial real estate property business securities private placement offerings and then provide ongoing monitoring to help prevent investment non-performance for the entire term of the holding period. DST sponsors frequently have vertically-integrated operating businesses, so the DST offering comes with a host of conflicts-of-interest that can lead to future claims of investment fraud start getting thrown around.
Call INVIZEN today at 832.663.9634 to learn more about what we can do for your firm and requirements.