The BREI investment process has been honed over many years. The process typically consists of six stages: legal and tax assessment, origination and deal screening, preliminary underwriting, due diligence and closing, post-acquisition asset management and exit.
Legal and tax assessment
For new investors, the team will investigate tax matters and legal structuring relevant to the location of the client and the target real estate market. The appropriate legal vehicles that satisfy commercial, regulatory and tax objectives are then established.
Origination and deal screening
The team members use their extensive industry relationships in Europe and the Asia Pacific region along with targeted networking to source investment opportunities. Through their contacts with property investors, developers, bankers and other intermediaries, they aim to secure off-market transactions where possible. The team meets regularly to discuss and screen opportunities, initially conducting “back of the envelope” analysis to assess whether a potential transaction merits further consideration.
Investments deemed appropriate are evaluated in greater depth. Points typically considered include local market conditions, existing and potential tenants, lease terms, value creation opportunities, debt financing availability and terms, nature of competing capital and likely impact on pricing and exit options. A detailed financial model and deal memorandum are prepared to capture the main aspects of a potential transaction.
Due diligence and closing
Lawyers are appointed to review contracts and leases, surveyors are retained to conduct valuations, engineers are hired to perform technical and environmental due diligence and in-depth market research is conducted. Debt arrangements are finalised. A sale and purchase agreement is negotiated and the transaction proceeds to conclusion subject to satisfactory due diligence.
The asset management team takes on the asset and proceeds with the agreed strategy post closing. Activities typically include the appointment of local property managers where appropriate, the approval and monitoring of annual budgets, leasing plans and capital spending and the development and oversight of business plans for the investments. Investments are valued formally by an independent third-party valuer on a regular basis.
Exit options for each investment are assessed on an on-going basis with the aim of taking advantage of property and capital market conditions to maximise investment returns for the investor. At the appropriate time, a hold/sell analysis is conducted and the investment’s projected return is compared to the original underwriting and the aims of the investor prior to an exit.