A real estate lender was approached by a property owner requesting a bridge loan for a two building office portfolio in Philadelphia. The buildings were built in the late 1930s - with one renovated more recently in 2000. Both offered numerous amenity spaces for the tenants such as conference centers, fitness rooms and restaurants. The owner also wanted to develop additional adjacent lots into another office building.

— He needed a stamp of approval before the handshake

The lender only wanted to give the loan if the property’s income would  cover the debt payments. To ensure it would, he needed to confirm:

• The portfolio's current profitability
• The feasibility of the additional lot development
• The value of the proposed development on the additional lots.

As a private lender who specializes in loan structuring and lending, our client wasn’t fully confident in his familiarity with the detailed nuances of regular due diligence and specifically with the nuances in analyzing the value of the additional lots. But he knew the portfolio needed to be looked through correctly before he could give a handshake on the deal.

— We did the analysis and gave him the conclusion

Our client needed our analysis and guidance. We got to work on the meat and potatoes of the portfolio and:

• Did a site visit to verify the occupancy and building condition
• Did a deep dive into the properties current and historical financials to ensure that the property was operating smoothly
• Ran a zoning analysis to see the allowance for additional development at the site
• Did a market and feasibility analysis for the additional lots to see the feasibility of the potential development
• Ran a risk and cost analysis for the additional development

— He gave it up

Our analysis showed that the income was different from what the owner said it was.

And that the development of the additional lots had limited success and income potential.

With all the conclusions given - the client decided not to go ahead with the deal.

All in all — Analysis + Facts + Knowledge