The Failure of CRE Investment Loss Mitigation in the Analytics Age

More than $500 billion in CRE loans and investments are expected to be realized this year, worldwide.  That’s an astounding number.  CRE investment loss mitigation practices have not proven to be up to the task (otherwise, the losses would be a lot less, wouldn’t they?).  … More The Failure of CRE Investment Loss Mitigation in the Analytics Age

Time is Money: Bridge & Mezzanine CRE Lending Opportunities for CRE Properties & Projects

Time is money.  We all know that CRE deals come with a built-in self-destruct mechanism in the form of the feasibility period commonly associated with every real property acquisition agreement.  The promoter has to get enough due diligence completed to justify the contract going hard or closing on the land or exit the deal and eat a capital loss.  Historically, mezzanine and bridge lending has been largely ignored due to the higher interest rates associated with these funding products.  While it is true these funding products cost more, a closer look may reveal that cost may in fact be negligible compared to the cost to capital associated with a lost opportunity. … More Time is Money: Bridge & Mezzanine CRE Lending Opportunities for CRE Properties & Projects

Due Diligence Disclosures: We WILL Find Out

If you are going to undertake a securities sale for your company – either issuing equity securities or being the maker of a loan – you have to disclose the risks involved in the investment to protect the interest of those who may wish to purchase the securities as well as protect yourself against future accusations of investment fraud for having failed to do these disclosures fully, completely and honestly.  Having said, it never fails to surprise me when our due diligence review finds a disclosure issue that nobody thought would either be relevant or just didn’t want out there because it would reflect poorly upon the company’s prospects for a successful outcome. … More Due Diligence Disclosures: We WILL Find Out

Poor Business Plans Get Poor Funding Outcomes: What Underwriters Know That You Ignored

Look at your business plan.  Ten bucks says your business plan isn’t even the right document the underwriter really needs to see.  When we onboard an underwriting transaction and request the production of the company’s business plan, we almost always get a capital funding proposal they are using to solicit capital investment and not the plan of operations that demonstrates how the business is going to proactively manage execution risk for the benefit of the capital investors. … More Poor Business Plans Get Poor Funding Outcomes: What Underwriters Know That You Ignored

What Exactly is a Business Plan? Clear the Air on Financing Due Diligence

The key elements of the business plan of operations revolve around the concept of understanding what would likely happen if the promoter (or any other employee of the business) is no longer with the business.  Does the evidence suggest the person stepping into the position will cause the capital investors to suffer a potential loss due to delays or errors in decision-making due to having no clear instructions on what to do or not?  This is the core issue that directly bears on whether execution risk has the potential to be a materially-significant condition precedent to loan/investment loss severity risk or not.  … More What Exactly is a Business Plan? Clear the Air on Financing Due Diligence

An End to Relevancy: Credit Reporting & Risk Management in CRE Transactions

Real-time market event reporting provides the logical alternative solution to the inherent shortcomings of credit risk management practices that focus on subjective decision-making criteria in light of data pertaining to the conditions and events that would drive detrimental credit outcomes.  In short: you now have the choice of addressing the cause or the effect, which makes better sense to you? … More An End to Relevancy: Credit Reporting & Risk Management in CRE Transactions

Picking Up The Clean End Of The Turd: FannieMae & CIRT

Any insurance expert will be happy to tell you that someone will be happy to help insulate you from the consequences of your decisions for an even greater fee.  The reality remains that spreading risk across a greater base of risk-takers is no substitute for preventing the risk from occurring in the first place.  CRE transactions require proactive risk management and proactive risk mitigation measures that follow the transactions over the course of the full term of the investment holding period.  Valuation, feasibility analysis of market opportunity, underwriting analyses and due diligence reviews that are limited to the pre-closing funding period are just not going to cut the mustard.  In today’s world there is going to be no substitute for continuous, real-time monitoring of the risks that can contribute to future asset obsolescence and result in greater investment loss severity risk. … More Picking Up The Clean End Of The Turd: FannieMae & CIRT