An Overview of the Options for Commercial Real Estate Investment
For individuals interested in commercial real estate (CRE) assets, there is no shortage of investment options. In fact, there are so many that the choices can be overwhelming. In this article, we will review them in two buckets, direct and indirect. But first, let’s start by defining exactly what a commercial real estate asset is. […]
How Do We Decide When to Purchase a Property?
As a private equity commercial real estate investment firm, we are constantly on the hunt for new investment opportunities into which our capital can be deployed. But, we aren’t willing to purchase just any commercial property. Each potential investment must pass a rigorous due diligence process and it must be approved by our senior leaders […]
Understanding the Importance of Verifying Operating Expense Line Items
When considering a commercial real estate investment, one of the first things that an investor will do is to ask the seller (or their representatives) for a series of documents. Typically, these documents include: prior year financial statements, property tax bill, utility bills, a rent roll, property management contracts, and insurance policies. Once received, the […]
Should I Sell My Commercial Property? When is the Right Time?
Much of the literature on commercial real estate (CRE) analysis tends to focus on the analysis required before a property is purchased. While this is incredibly important, it is only part of the story. The sales price is just as big a driver of returns as the purchase price. But, it tends to be overlooked. […]
What to Look For in the Fine Print of a Commercial Real Estate Investment
For individual investors who want exposure to commercial real estate (CRE) assets, the easiest way to obtain it is by working with an investment manager. That manager could take the form of an individual deal syndicator, a private equity firm, or a dedicated real estate fund. No matter who the manager is, they are all […]
Understanding the Difference Between Open-End and Closed-End Commercial Real Estate Funds
For investors who wish to allocate capital to commercial real estate assets, there are two options for an investment vehicle: individually syndicated deals and pooled investment funds. The key difference between the two is how investment capital is deployed. In an individually syndicated deal, investment capital is raised and deployed into one specific real estate […]
What to Look for in a Commercial Real Estate Private Placement Memorandum
When raising money for a commercial real estate investment, the transaction sponsor is required to provide a number of legal documents to prospective investors. These documents include marketing materials, a subscription agreement, operating agreement, legal disclaimers, and the Private Placement Memorandum (PPM). Of these documents, the PPM is one of the most important because it […]
Understanding the Importance of Property Intangibles
There are many things to consider when trying to decide whether or not to purchase a commercial property. For example, potential investors should review the rent roll to see how much revenue the property produces and they should look at the operating statement to see how much it costs to manage the asset on an […]
What is the Debt Service Coverage Ratio?
Nearly all commercial real estate transactions are financed with some combination of debt and equity. The equity comes from the potential property owner and/or their investors while the debt comes from a bank or non-bank lender. The exact amount of each can vary by transaction, but equity typically consists of 15% – 25% of the […]
