The acquisition of CRE properties requires the right underwriting tools to maximize acquisition opportunities, restructure transactions on the bubble and prevent future default risk loss events.
When More Than Just Underwriting Tools Are Required
The acquisition of commercial real estate properties and new construction projects by RIAs for AUM transactions are subject to a high degree of rejection. The rejection is almost always due to default risk underwriting failures.
Markets create opportunities and cash flows create collateral values. Credit risk is manageable when liquidity standards are applied. Default risk assessment requires more than analytics tools to create supportable outcomes and lower the rejection rate and investment loss severity risk exposure.
The underwriting tools of days gone by give us models of outcomes that are dependent upon empirical assumptions proving to be true. If they don’t prove to be true, then loss events are likely to occur. The new generation of analytics must go beyond the empirical assumptions and provide a proactive means of managing prevention of default and investment loss on a move-forward basis for the entire holding period.
The INVIZEN Model Overview
Our systemic approach is based upon the incorporation of the holistic end-to-end solution approach that combines next-gen analytics together with systemic control systems that provide the market-centric solution set framework of the INVIZEN Model. This building block approach focuses on the market data pertaining to the asset class in question itself, the value the capital markets place on the asset class in general, the specific risk elements of the specific transaction construct (i.e.: known colloquially as “story book deals”) that legacy systems are just not equipped to support (hence the saying, “we don’t do story book deals”), to determine the potential for key risks to actually have the ability to materialize and become materially significant in the course of the investment holding period. The system design provides an intentional departure from some business practices so that many of the subjective financial investment risks that conventional wisdom tells us are “baked into the deal”, can actually be eliminated from having a potential impact altogether. This has a potential profound impact on the entirety of the risk profile of a given asset vertical in general, and the subject risk analysis in particular. From a practical viewpoint, this means subjective financial investment risks such as bankruptcy risk, foreclosure risk, liquidity maintenance risk, fraud, and even systemic market risk (to name a few) can be reduced to a level of not being reasonably expected to have a material impact on the transaction, or being eliminated altogether. The INVIZEN Model’s integration approach takes these tenets and incorporates them in to the resulting business model, the reporting program and management of all funds as the basis for structuring a given transaction opportunity.
The INVIZEN IT platform provides Rainmaker Analytics with the tools to serve your firm on a continuing basis for the entire holding period of your investments. The iCREDIT program suite of post-funding fraud and default risk prevention services offers a net zero cost opportunity to the business being served. Find out what we can do to further your commercial real estate and B2B business investment prospects with a simple phone call and confidential consultation.