Information Sharing
Next-gen tools make due diligence greener.
The exchange of information between buyers, sellers, brokers, lenders, and lawyers when it comes to closing an apartment deal used to kill a lot of trees. People would trade lots of paper, whether in the form of faxes or as binders mailed across the country. And that’s not even counting the airline miles logged by lawyers and accountants.
Thankfully, the Internet has helped eliminate a lot of those hassles. For instance, companies such as New York-based IntraLinks can house financial and legal documents on a centralized server. “We’ve completely digitized the process and put these documents in a highly secured form up in the cloud,” says Matt Porzio, vice president of M&A product marketing for the company.
So, instead of spending time and money on plane tickets and shipping services, buyers and sellers simply log in. And, as a bonus, sellers can also see which interested parties have viewed their documents.
Even proprietary information, such as sales and rent comps of nearby assets, is no longer difficult to come by. Gone are the days of having to buy a research subscription and wait for publication. Now, the information is readily available. “You can download different types of information and slice it and dice it to find out what you need,” says Mark Stern, senior vice president of multifamily investments for Chicago-based Waterton Associates.
Still, there are limits to Google’s technology. For one, the “street view” is not available for every address. This is where a company such as Rochester, N.Y.-based Pictometry can help by using low-flying planes to take pictures of areas. Many police departments and fire departments already subscribe to its software. “Before [the police] get to a location, [Pictometry] shows a high resolution photo in 3-D of all of the buildings around the one that they’re going to,” says John Smith, chief investment officer of Rochester, N.Y.-based REIT Home Properties, which uses the service. “They know the alleys, the doorways, and they know a criminal might be hiding behind a dumpster. It is unbelievable.”
When it comes to getting to know a potential acquisition itself, however, services such as those provided by ConstructionPhotoDocs.com, a Woodland Hills, Calif.-based forensic photography firm that can take detailed shots of a property, help buyers find out more about the asset. The firm creates web pages for each asset to display these photos along with documentation on utility costs and leasing velocity for specific units. “You have all of these photos and someone can make a judgment call on what it will cost to paint or re-roof or put in new windows or whatever needs to be done when they underwrite maintenance issues,” says Scott Yahraus, a principal at ConstructionPhotoDocs.com.
Projecting the Future
Finding the deal and doing reconnaissance of the area is one thing. Projecting how the asset will perform individually or within your portfolio is quite another. Thankfully, there are tools to help with that process, as well. In many cases, those tools have been built internally by buyers who wanted to design products looking for a specific blend of performance metrics.
