Commercial real estate (CRE) investors see a vast amount of data on properties. Firms accumulate an internal proprietary dataset with every deal they underwrite or gather the offering materials on. More often than not, once they pass on a deal, they archive or even delete the deal data, potentially losing the chance to extract and capture future insights from it.
However, this wide range of data is extremely useful to investment teams as they build a regimented way of working. It’s essential to growing long-term institutional knowledge, as well as supporting future underwriting and decision-making.
Not all “passes” are created equal
When considering “passed” deal data, some potential deals are more context-rich than others.
- Quick passes: Deals reviewed at a surface level with the information from offering memorandums and baseline comps before declining to pursue
- “Back of the Napkin” valuations: Estimating value using industry standards and benchmarks in a rough calculation
- Pro-forma analysis: A complete due diligence process of gathering rent rolls, site plans, T-12s, market comps, and all collateral in the war room from a specific time range
- Additional context: Other property data that may come from sources such as market reports from brokers or off-market properties
What matters most is how this sprawling range of data can be best stored, organized and accessed when a deal is on the line.
Sifting through data from passed deals can be error-prone, inaccessible and inefficient.
Because an investment team sees a high volume of deals in any given month, a vital part of the process is sorting and managing data from deals, closed or otherwise. Even properties that were previously a quick pass can include relevant insights. Finding ways to leverage this deal data can create a significant competitive advantage.
But the reality is that most firms fail to realize the potential of data from passed deals. Typically, they face two issues with the data from passed deals.
- Data is not stored in a single location, easily accessible to the entire team
- Data is not in a consistent format that allows for effective analysis
These issues diminish investment teams’ productivity and prevent effective use of the data. In theory, a deal team could go back through historical OMs and comps, request information from brokers, or access third-party market data.
Along with this process being a cumbersome one – it might also miss out on data from past private or off-market opportunities that include valuable insights for a current deal. Team members responsible for managing this data waste hundreds of valuable hours each year, and in commercial real estate, time kills all deals.