1、AICPA National Real Estate ConferenceDue DiligenceStephen A.StonerNovember 17,20002http:/ (海量营销管理培训资料下载)What is Due Diligence Risk management toolVaries by client Varies by practitionerConsistency beginning to develop in secondary mortgage marketsIndustry standards accepted by rating agencies,invest
2、ors,and intermediariesDependent on good data23http:/ (海量营销管理培训资料下载)History of Due Diligence Prior to 1980sMinimalLate 80s,early 1990sRequired and criticalMid 1990s-currentChanging real estate marketsMuch done internallyLarger buyersDifferent risk mitigation proceduresFutureto be determined34http:/ (
3、海量营销管理培训资料下载)Reason for Due DiligenceFile stufferDecision toolSales toolAsset managementDeal structuring45http:/ (海量营销管理培训资料下载)The Due Diligence ProcessSalesContractExecutedFinancialOperationalReviewTenantReviewMarketAnalysisPhysical Asset and EnvironmentalReviewPro FormaAnalysisRecommendationto Buy
4、er56http:/ (海量营销管理培训资料下载)The Due Diligence ProcessSalesContractExecutedTenantReviewMarketAnalysisPro FormaAnalysisRecommendationto BuyerFinancialOperationalReviewPhysical Asset and EnvironmentalReview67http:/ (海量营销管理培训资料下载)Financial Operational ReviewRevenue StreamsCurrent RentSigned and current lea
5、ses(including amendments)Legal clausesRight of first refusalGo dark provisionsRight to cancelNoncompete clausesOtherTenant tourAccounts receivable agingOther forms of cash flowStorageInternet and telecommunication accessPhone revenue(hotels and motels)Other78http:/ (海量营销管理培训资料下载)Financial Operationa
6、l ReviewOperating Costs:high levelCosts per square feetBOMA and other benchmarks(building size,location and age)Analytic reviewReview of tax returnsAdjustments for unusual itemsResults used to focus detailed review89http:/ (海量营销管理培训资料下载)Financial Operational ReviewOperating Costs:detailedService con
7、tractsEconomic reviewReview executed contractsCompare financial terms to operating statementsLegal reviewDurationAbility to cancel or rebidImplications of saleRepairs and maintenanceReview of vouchersCapitalization versus expensesProperty taxesReview recent tax billsOtherReview of vouchers910http:/
8、海量营销管理培训资料下载)Financial Operational ReviewCapital itemsDeferred maintenanceWalkthrough Engineering reportCapital improvementsEngineering reportStrategic plan for property(ies)Identifiable versus annualLease commissionsLinked to revenue streamMarket commissions-adjusted for business planTenant improv
9、ementsLinked to revenue streamPrimarily driven by physical condition of building and market requirementsEngineering report1011http:/ (海量营销管理培训资料下载)Financial Operational ReviewConclusionsNormalized NOIIdentification and quantification of trendsUnusual items1112http:/ (海量营销管理培训资料下载)The Due Diligence P
10、rocessSalesContractExecutedTenantReviewMarketAnalysisPro FormaAnalysisRecommendationto BuyerFinancialOperationalReviewPhysical Asset and EnvironmentalReview1213http:/ (海量营销管理培训资料下载)Evaluation of Tenant CreditFinancial stability(credit rating)Industry concentrationsOther concentrations1314http:/ (海量营
11、销管理培训资料下载)The Due Diligence ProcessSalesContractExecutedTenantReviewMarketAnalysisPro FormaAnalysisRecommendationto BuyerFinancialOperationalReviewPhysical Asset and EnvironmentalReview1415http:/ (海量营销管理培训资料下载)Market AnalysisThree primary componentsSite analysisSupplyDemandSupplyDemandSquare FeetTim
12、e1516http:/ (海量营销管理培训资料下载)Market AnalysisSite AnalysisVisibilityAccessIngress/EgressAmenitiesSources of demandCompetitionQualitySurrounding land uses,current and projected1617http:/ (海量营销管理培训资料下载)Market AnalysisSupplyHistorical inventoryExisting and future competitiveDisaggregated by size,quality,an
13、d ageProjected future developmentPlanning departmentsMedia researchLocal market interviews1718http:/ (海量营销管理培训资料下载)Market AnalysisDemandHistorical absorptionMarket research of key indicatorsNew business startupsPopulation growthOther economic trendsOther demographic trendsProjected growth in demand
14、Demand(sq ft)Time1819http:/ (海量营销管理培训资料下载)Market AnalysisReconciliation of supply and demandRental ratesPercentage rentsOccupancy levelsCommissionsBuildoutGrowth ratesRentalExpenseCapitalization ratesRenewal assumption1920http:/ (海量营销管理培训资料下载)Market AnalysisSpace may be vacant prior to re-leasingNew
15、 rent is setNew tenant improvements,commissionsBase years,sales,other levels are setRenewal assumptions-What happens at the end of a lease?2021http:/ (海量营销管理培训资料下载)The Due Diligence ProcessSalesContactExecutedTenantReviewMarketAnalysisPro FormaAnalysisRecommendationto BuyerFinancialOperationalReview
16、Physical Asset and EnvironmentalReview2122http:/ (海量营销管理培训资料下载)Physical Asset and Environmental ReviewEngineering reportDeferred maintenanceRequired capital improvementsArchitects or space plannersEfficiency of existing space:opportunities or constraints for value enhancementEnvironmentalPhase 1,2 a
17、nd 3Title search2223http:/ (海量营销管理培训资料下载)The Due Diligence ProcessSalesContractExecutedFinancialOperationalReviewTenantReviewMarketAnalysisRecommendationto BuyerPhysical Asset and EnvironmentalReviewPro FormaAnalysisConverting analysis to cash flow2324http:/ (海量营销管理培训资料下载)PROFORMA ANALYSISAnalysis o
18、f projection assumptions based upon historical performance and market researchCompilation of projected revenues,expenses and net operating incomeAnalysis of capitalization and discount rates,debt service and post-financing cash flow,if required2425http:/ (海量营销管理培训资料下载)Things to look for:If a portion
19、 of the property was non-operating during the year,the effect on future operating results needs to be consideredThe sellers or buyers budget,if used in the analysis,may contain optimistic assumptionsThe fees and corporate overhead expenses charged by the seller will be modified after acquisitionAll
20、appropriate taxing jurisdictions and respective taxes are adequately reflectedEffects of non-recurring items projected to occurPROFORMA ANALYSIS2526http:/ (海量营销管理培训资料下载)Tenant by TenantAppropriately TimedIndustry AcceptedReady for“What if”AnalysesEasy to Review and ProofPROFORMA ANALYSISAdvantages to Prefab Systems 26