Sourcing Development Deals
Hey chimps,
Looking for new methods/resources for sourcing new development deals.
A little background: I work as an analyst on a small team for a family office that has around $1B AUM. Investment criteria is usually ground up MFR developments 100+ units in the Sun Belt and South Florida. What methods do developers usually employ for connecting their projects with providers of capital? I'm expected to source and underwrite a couple of deals per month, even though most of what we close on is stuff brought to us by our broker network or GPs we have worked with previously.
Looking for advice beyond the usual online databases (CoStar, Loopnet, Crexi, etc) and larger brokers. We are flexible in that we usually do pref equity but sometimes come in as the senior lender.
Analyst 1 in RE - Comm, shame nobody has responded. Maybe one of these topics will help:
More suggestions...
If those topics were completely useless, don't blame me, blame my programmers...
Every developer is different, but for equity people either have a fund they've raised or they are syndicating their deals with a pool of high net worth individuals or institutional groups they are familiar with already. For the debt side of deals its putting together similar books and/or sending the book to debt brokers to get more exposure and find the best terms.
A lot of capital sourcing from my experience is very relationship based and reaching out to current connections to see who else they would recommend. Obviously not easy if you're entry level, but if you've done deals and closed on debt/equity with shops in the past I would reach out to those same groups. People tend to keep doing deals with groups that they know can complete successful deals.
To reiterate what has already been said, project capitalization is a hyper relationship-focused space. Whether it be on the debt or equity side, most groups like to do repeat business with groups who know how to work together.
That being said, many lenders are trying to win business and are willing to take on new clients, but it can be a full-time job making calls to "network" and build these relationships. For many developers, they don't have the time/manpower to spend all waking hours cold calling Lenders/LP investors (outside of their pre-existing relationships). If there isn't a level of rapport on these calls, it is often times hard to get a loan officer to pitch your deal to their IC, as they typically feel like they are being "shopped" or have a low likelihood of winning the deal.
For this reason, I think the most beneficial thing you can do is engage a Capital Markets team (Broker/Advisors). These are guys/gals that spend 95% of their time deep in the trenches of building relationships with prospective lenders/equity providers. With this in mind, a Capital Markets broker is able to give you a quick indication of what deal terms would look like as they have a good "finger on the pulse". The debt and equity markets are tricky to navigate as a novice but with the right advisor, they can help educate you and put you in touch with the best fit capital solution.
If you are looking to connect with someone like this, PM me and I can connect you with some of the brokers I have used in the past.
how much capital do you typically allocate per deal?
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