BRP-SH follows a clearly defined, disciplined, and efficient investment process to identify and select attractive investments, and to quantify and mitigate risk factors. This process dictates the path of a potential investment from sourcing through market and property level research, underwriting, approval, financing, development, design, permitting, and asset and property management. A description of the BRP-SH process is described in detail below.
A. Investment SourcingBRP-SH determines its investment objectives and proactively seeks out opportunities which meet those investment objectives. Typically, BRP-SH will access off-market opportunities through a number of channels to gain exposure to the largest number of deals that fit its investment parameters:
- BRP′s past operating partners
- Its relationships within financial institutions and their advisors
- Local governmental leaders
- Local real estate professionals
B. Deal ScreeningBRP-SH's management team vets every potential opportunity through weekly team meetings to discuss market conditions, progress on current investments and discussions with existing and potential partners. We anticipate market changes and respond by either being more aggressive with our investment ideas or more defensive, depending on market conditions.
C. Preliminary Due DiligenceBRP-SH subjects potential transactions to rigorous diligence and analysis including: visiting the site, obtaining independent third-party market research, verifying any third party research, reviewing comparable transactions and developing various financial models including sensitivity analysis. We are focused on finding transactions with multiple exit strategies. Investments are also analyzed relative to the overall existing portfolio to ensure that a balance remains across risk/return, life cycle and geography.
D. Due DiligenceOnce a contract is signed and a refundable deposit is made, we continue the due diligence process. Third-party consultants are engaged to examine physical integrity, environmental status, zoning status and legal standing. Determination of the potential final capitalization is started so that the debt and equity needed to close are identified and fully vetted.
E. Development Due DiligenceOnce we have a strong understanding of a property's underlying zoning, we decide whether to move forward with a transaction. In today's market, we are not willing to take any entitlement risk unless the risk/reward is overwhelming. We have developed a rigorous construction budget process. It involves forecasting construction costs based on the type of structural and MEP systems we are going to use and a firm understanding of the costs to permit and build the project. We partner with the best architects, engineers and local contractors in this process, then with our operating partners to accurately forecast rents and operating expenses.