How to structure your real estate deal for success
18. September 2020
According to a July 2020 REFIRE report, total transaction volumes for the German hotel market alone declined by 11% in the first half of 2020 compared to the previous year, coming in at €1.3 billion. The second quarter of the year witnessed a significant regression to approximately €317 million as a result of the COVID-19 pandemic, nearly three times lower than the figures recorded in 2019. Close to 60% of the transaction volume over the first half of 2020, which included the sale of four Aroundtown hotels to French investor Primonial REIM, was the result of German buyers.
Despite global uncertainty, commercial real estate transactions will inevitably gain momentum with cross border activity predicted to see an uptick in the coming months.
An essential part and backbone to the success of any deal is adequate preparation of documentation relating to due diligence. Now a widely accepted means of carrying out a real estate asset sale, virtual data rooms (VDRs) streamline document review. None the less the locating and aggregation of data remains a particularly arduous and time-consuming task and if done poorly can create severe delays or right off a deal completely.
So what transaction related documents are recommended when preparing for a sale?
Supported by the German Society of Property Researchers with the goal to improve efficiency and shorten the pre-check phase, the first official index for real estate data rooms, jointly developed by Drooms and six other companies, details basic requirements. Although not obligatory the predefined ‘GIF’ index allows for:
- The building of a structured data room
- A quick & clear overview of the necessary documents
- The inclusion of legal, technical and tax verticals relating to due diligence
- Easy document allocation with drag & drop
- Increased flexibility for the updating of documentation
Download gif Standard Index now and speed up your deal!
The importance of functionality
Alongside a standardised index, real estate professionals are advised to select a data room with the appropriate functionality. Contrary to popular belief not all VDRs are created equal. Many providers on the market offer clunky, slow and outdated platforms and work with dubious third parties to implement basic technical prerequisites. Drooms, the leading provider of virtual data rooms in Europe, has applied instant access technology to its platform enabling 0 document loading time. Substitution of repetitive manual processes with smart workflows has been a priority for Drooms.
Built with artificial intelligence (AI), its Findings Manager feature filters the data room content and automatically attributes relevance to search terms, synonyms and related search patterns. This feature allows for the defining and quantifying of potential risks and opportunities specific to a project resulting in a huge speed advantage for transaction professionals. All findings can be exported to Excel for further processing (e.g. due diligence report). Auto-Allocation also uses machine learning algorithms and implements constant learning to refine documents future index allocations.
To optimise your workflow and keep transaction costs low even when large volumes of documents are involved, click below.