Best way to present 'off-market' Multi-fam to institutional buyers
I'm a commercial broker. Been fortunate enough to be a part of a few large institutional sized multi-fam deals. I want to do more. Spent most of my 10 years in this biz doing mid sized retail/shopping center deals. They pay well, but I'm looking for a pivot while my local market is in a lull.
What are some ways to court and/or present 'off-market' assets to investors institutional investors? I've seen first hand- a private equity acquisition manager accept a price, gross ann. income, and an address to get excited about the dialogue (that deal closed at approx. 132M, not a deal i was a part of).
I know that's rare, but if I wanted to dedicate a couple months working through my relationships to find 100 unit+ Multi-fam with the specific goal of connecting it to a buyer, what advice would you give?
Buyers and acquisitions, what gets your team excited right now? Sure, upside, but can you provide rate and insight? Any specific details would go a long way.
Will come back and share any success that comes from this effort. Looking for constructive insight from the other side of the fence.
Bump - interested
Ask in RE forum
that's where I thought I had posted it. turns out WSO moved it to PE automatically due to the keywords. Re-worded it and it moved successfully. thx.
Based on the most helpful WSO content, when presenting off-market multifamily assets to private equity investors, there are several key points to consider to make the opportunity appealing:
Financial Summaries: Provide a succinct financial summary that includes gross annual income, net operating income, cap rate, and cash-on-cash return. These metrics are crucial for initial assessments.
Value-Add Potential: Highlight any upside potential through renovation, rebranding, or improving operational inefficiencies. PE firms often look for opportunities to increase the value of the investment.
Market Analysis: Include a detailed analysis of the local market, demographic trends, and economic drivers that support the investment thesis. This should also cover rent comparables and occupancy rates.
Due Diligence Materials: Prepare a comprehensive due diligence package that includes property inspections, environmental reports, and title searches to expedite the evaluation process.
Management Team: If there's an existing management team, showcase their track record and expertise in managing similar assets.
Exit Strategy: Outline a clear exit strategy with projected timelines and potential resale value or refinancing options.
Relationships and Track Record: Leverage your past successes in institutional-sized deals to build credibility. Share case studies or examples of past transactions where you've added value.
Deal Structure: Be prepared to discuss potential deal structures that could be attractive to PE investors, such as joint ventures or co-investment opportunities.
Proactive Communication: Initiate the conversation with a concise, well-structured teaser that includes the address, price, and key financials to pique interest. Follow up with a more detailed package if there's interest.
Networking: Attend industry events and engage in forums where PE investors are active. Building a network can lead to more direct and warm introductions.
Remember, each private equity firm may have different criteria for what excites them, so tailor your approach based on the specific firm's investment thesis and past acquisitions. Keep an eye on the latest discussions in the WSO forums for real-time insights into what's currently driving interest in the PE space. Good luck, and do share your success stories!
Sources: PE Funds that Win - and IB that Tries, https://www.wallstreetoasis.com/forum/private-equity/from-a-pe-perspective-what-materials-help-you-vet-a-deal-opportunity-quickest?customgpt=1, Best Resources For Raising Capital For Emerging RE Developers?, Private Equity or Pizza Equity?, Cold Calling for off market deals
Respect the hustle. Can you clarify how exactly you intend to put deals together? You have seller(s) and are trying to find a buyer, or vice versa? What market are you taking about, and where do you think market pricing is?
I have access to numerous institutional sellers. I intend to probe for properties coming up on the dispo list. I'm not outfitted to list these assets, not saying they'd give me the listing either. But I know I can get intel that it's coming up up and maybe a rent roll.
I'm asking for best practices to open the door with buyers for off-market deals like this. I'm in Cali, but I would pursue any metro market my buyers show interest in. Since the shifting of the tide, a real and ready buyer who would take time to tell me what they want would be the most valuable contact. I would go from there and use my relationships to uncover potentials.
Market pricing analysis would follow identifying an asset. Does this answer the q?
Got it. Was just curious. There are no shortage of buyers currently, the trick has been finding sellers that want to transact where buyers are pricing…
Will be an uphill battle. Most institutional JV generally have provisions regarding the sale which could make it difficult to shake things out off-market. Plus generally the broker that sold it to the buyer gets the listing on the dispo.
When presenting an off-market multi-family property to institutional buyers, focus on these key elements:
1. Create a compelling story: Highlight the exclusivity and potential returns of the off-market opportunity.
2. Provide detailed property info: Include location, unit details, market analysis, and competitive comparison.
3. Emphasize value-added potential: Identify opportunities for renovations, operational improvements, and potential exit strategies.
4. Use professional materials: Utilize high-quality visuals, a clear pitch deck, and credible third-party reports.
5. Address due diligence concerns: Be transparent about any issues, prepare due diligence materials, and be responsive to inquiries.
fantastic points. I should probably invest the time to build a color presentation but keep it lean. Not like a marketing package. Some photos, and right to the numbers. Typically, I'd refrain from calculating pro forma income because everyone is going to come up with their own different projections. I should include market data showing comparable unit rents in the area.
To get people excited about an off-market deal, I would say you truly have to keep it off market. I would have a list of developers or institutional capital sources in mind for specific markets, product types, return profiles etc., then shop it to your top pick exclusively. I would wait to shop it to your 2nd or 3rd pick until after the 1st pick has indicated that they aren't interested.
If you are shopping an "off-market" deal to 5-10 connections then they'll hear about it from each other and it effectively becomes marketed. That pisses people off.
In terms of what to present, you'll want to have some rough, realistic underwriting & business plan done if it's not already included in your OM. Operators and capital will quickly sniff out any BS assumptions. As mentioned above, have a good idea of YoC / RoC targets that the buyer will need to hit.
You'll have to manager the owner as well as they likely will want to try and show it to as many people as possible. Finding a real motivated seller is crucial - someone who is distressed, just wants to get out, etc. You can emphasize certainty of capital, quick closing timing, etc. to the seller as a reason they should go with your off-market buyer.
Hopefully this is helpful.
porkbellies very helpful . good tact and etiquette advice.
Coming back to so many good responses. Thanks all.
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