An Unclear Future Requires a Clearer Focus
While recent years have brought the commercial real estate industry much success, the past few months have been much more challenging. A number of factors have contributed to an overall slowdown that has had a ripple effect across the industry and has impacted commercial real estate deal management overall:
- The cost of capital has increased due to rising rates
- Lenders are being more cautious in their due diligence
- New construction has slowed in favor of conversions
- Industrial development has slowed due to economic concerns
- Specific markets have experienced lease avoidance
Today, general partners must be intentional about becoming smarter and more efficient in their approach to getting deals done. As a result, interest in and focus on commercial real estate deal management and deal sourcing strategies have increased with the intent of maximizing results in the years to come.
Here, we’ll explore areas of commercial real estate deal management where professionals should dedicate greater investment and attention in 2023 and beyond, with a particular focus on financing and closing.
Financing: Identifying the Most Ideal Capital Sources
As a commercial real estate professional, you know that securing the funding you need to make a new deal happen is crucial. In reality, it’s everything — without it, the deal doesn’t happen. While you’ll have a portion of equity in the deal, the majority of your capital will come from debt sources. This part of commercial real estate deal management thus must become a greater area of focus for firms looking to offset the many challenges present in the industry. A few examples of solutions that should be considered:
- Assess the capital stack of a potential deal to identify deviations from the norm
- Ensure you’re working with lenders that are ideally suited for specific asset types — not every lender is the same (size, asset focus, and other details matter)
- For equity-based capital needs, leverage technology to prioritize pitching offering decks to the most engaged investors and tracking their interest
Closing: Bringing the Capital to the Table
Another crucial stage in commercial real estate deal management naturally follows the fundraising process, and that’s closing the deal. Here, you’ll need to navigate bringing in the capital that has been committed to you and finalizing the transaction. Efforts to streamline this part of the process should include:
- Implement automated, efficient tools that decrease the amount of time needed to conduct a capital call while also gaining greater visibility and transparency for reporting and tracking purposes
- Conduct due diligence proactively — this should go without saying, but new commercial real estate professionals in particular are often prone to jump into deals without fully considering any pitfalls associated with the asset and their obligations
- Always remember that as the general partner managing the deal and all that comes afterward, people are primarily investing in you just as much — if not more than — the asset itself
Get the Tools You Need to Maximize Commercial Real Estate Deal Management
With so much still uncertain in 2023, now is the time to consider solutions that put your firm ahead of the curve. For so long, commercial real estate deal management has been an extremely manual process where professionals are dealing more in-person rather than with technology. While relationships are everything in this industry, you can build those without adding on administrative burdens.
At Covercy, our real estate investment management platform — with banking-embedded capabilities — is transforming the way commercial real estate professionals work with their investors and manage their assets. Here’s how our platform can position your firm for lasting growth in the year ahead:
- Fundraise intelligently with complete oversight over all transactions and details
- Conduct capital calls in a matter of clicks and see where funding stands any time
- Automatically distribute payments to investors’ accounts — no more checks!
- Leverage embedded banking tools to streamline transactions and payments
Ready for a new approach to commercial real estate deal management? Sign up for a demo of our platform now.