Due diligence is a thorough examination of a business conducted by a potential buyer, with a primary focus on assessing its assets and liabilities, as well as evaluating its commercial viability. Performing your due diligence is one of the most valuable tools for an investor when evaluating a potential investment. One way to perform due diligence is to attend a sponsor’s deal webinar. A second way is a proforma review with the investor relations team.
Today we will discuss the key fundamentals that should be present in a deal webinar and how they help an investor analyze the viability of the investment.
Deal Webinar Essentials
At Viking Capital, our webinar is often led by our CEO, Vikram Raya, along with Judah Feld, VP of Acquisitions, responsible for vetting and underwriting all our deals, and Chris Parrinello, Director of Investor Relations, who educates investors about the particulars of the deals and answers any questions or concerns they may have.
These are the topics each deal webinar will cover:
#1 Executive Summary- Investment Highlights & Return Profiles
#2 Financial Analysis- Proforma & Business Plan
#3 Property Description- Physical Attributes & Amenities
#4 Location Overview- Economic Growth & Area Attractions
#5 Portfolio & Performance- Introduction to the Sponsor & Track Record
Deal Summary Breakdown
The deal summary introduces the property to the investors. It outlines the basics of the property characteristics such as year built, number of units, location, and complex size. It also includes the investment summary. This summary conveys why the property is a successful investment opportunity. It includes a breakdown of the investment classes, anticipated returns, and debt financing. This section focuses on the investment profile.
Financial Analysis
This section details the proforma also referred to as a financial model for investors. It shows the math behind a real estate acquisition made up of concrete data and assumptions. Many of the figures are variable. The forecast is dependent on the knowledge and experience of the sponsor. This model tells investors if the sponsor is reserved or aggressive in their underwriting and can help determine if these assumptions are realistic. This financial analysis tells the story of the deal through numbers.
The second half of the story is the business plan, indicating how we will take over the property, implement our value-add plan (if applicable), create forced appreciation, and represent the overall investment thesis and strategy.
Property Description
The property description provides a comprehensive overview of the physical features of the property, encompassing details such as unit sizes, community amenities, parking, property staffing and policies, utility companies, and nearby schools. This segment includes current property photos and often incorporates renderings or mock-ups illustrating proposed upgrades and changes.
Within this section, our team leverages visual aids to assist investors in envisioning the business strategy in action. Through before-and-after images, we showcase the transformation process. This highlights how strategic upgrades lead to increased Net Operating Income (NOI) via rent increases for enhanced units.
“Location, Location, Location”
In real estate location is everything. That holds, especially for Multifamily syndication. An essential criterion for an ideal location involves two variables: location in the path of progress or within an already established and thriving area. The “path of progress” refers to an area that is being developed or forecasted to have substantial growth, due to high concentration in surrounding areas pushing migration that way.
The reason for this location factor is most consumers choose to live near access to job opportunities, and proximity to attractions like shopping centers, restaurants, and grocery stores.
At Viking Capital, we meticulously prioritize these key indicators when scouting for new investment opportunities.
Portfolio & Performance
This is one of the most valuable sections of the webinar. Getting to know who you’re partnering with is vital in any business transaction, and real estate investing is no different. It is the most important indicator of what to expect for the duration of your investment. As the saying goes “History has a way of repeating itself”- if a sponsor has lost investor funds through malpractice or deceptive analytics you should steer clear.
A successful track record and a sponsor’s proven ability of underwriting multifamily deals are major green flags!
The Intrinsic Value of Investor Webinars
Whether you’re a first-time investor or have partnered with this sponsor numerous times, joining an investor webinar presents a valuable opportunity. This virtual face-to-face interaction empowers investors to delve into the intricacies of the investment deal and pose real-time questions. Incorporating a deal webinar into your investment due diligence process strategically enables you to familiarize yourself with the sponsor and the property simultaneously.
Viking Capital concludes each deal webinar with a live Q&A session. This offers investors the chance to ask questions and gain insights from inquiries raised by fellow investors. Our overarching objective is for every investor to leave with a comprehensive understanding of the proforma, potential returns, the business plan, our team, and our operational approach.
To review our track record book click here: our Portfolio
