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Slide 1: The Comprehensive DueDiligenceDEAL For Properties & Lands To be read with The MARKET of DEALS File HALIM HANI Tourist Club Area P. O. Box: 43944 Abu Dhabi – United Arab Emirates Mobile: +971 50 44 171 29 Tel: +971 2 6456 856 Fax: +971 2 6457 567 Alsalamahae@eim.ae halimhani@yahoo.com marketofdeals@yahoo.com www.MARKETOFDEALS.com The Comprehensive DueDiligenceDEAL The MARKET of DEALS introduces The Comprehensive DueDiligenceDEAL as the process of discovery and confirmation of the financial and physical attributes of the investment property. This important process is, in all too many cases, rushed or, worse yet, skipped entirely, in the sheer excitement that accompanies the probable purchase and selling of a Property. But think about it; Hundreds of Thousands or Millions of Dollars shall be invested in this transaction to close up a Deal.
Slide 2: The Comprehensive DueDiligenceDEAL For properties and Lands Therefore at the MARKET of DEALS The Comprehensive DueDiligenceDEAL in the sale of a Property may seem to inherently focus on the needs of The BuyerClient to be sure He is getting what He pays for. And to take a moment to logically consider the process carefully draft a sales agreement, review the documentation, conduct a site visit, consult, evaluate…Etc. After all, part of The Comprehensive DueDiligenceDEAL, as the SellerClient must open his books to the BuyerClient for close examination, As at the MARKET of DEALS The Comprehensive DueDiligenceDEAL will also protect The SellerClient’s interests and strategic to help him justifies the value of his property and strengthen the attractive offer. It gives the BuyerClient access not only to financial disclosures but to human resources, tax, fees, environmental and legal information. The BuyerCLIENT and SellerCLIENT may have competing interests — for example, The BuyerCLIENT wants as much information as possible while The SellerCLIENT may want to safeguard competitive information — but both can benefit from a Comprehensive due diligence process. As BuyerClient, The Comprehensive DueDiligenceDEAL provides the opportunity to confirm the accuracy of the SellerClient’s disclosures. It also helps the BuyerClient identify any potential concerns to address in the definitive purchase agreement. Examples of such concerns include the assumption of non competing obligations, questionable receivables and pending government approvals. The process may also help the BuyerClient plan to integrate the business into other operations. As SellerClient, The Comprehensive DueDiligenceDEAL helps determine any obstacles that could delay reaching a definitive purchase agreement and timely closing. For example, the process may turn up additional information the SellerClient must disclose. The Comprehensive DueDiligenceDEAL can also help SellerClient strengthen its negotiating position by establishing an appropriate value and prepare the business for ownership transition. No two Comprehensive DueDiligenceDEAL efforts are alike, and for the practitioner each transaction presents novel issues. The Comprehensive DueDiligenceDEAL typically begins when a SellerClient and BuyerClient complete their initial research and sign separately a letter of understanding for the purchase and the sell of a property The essence of any good real estate transaction is a game played between BuyerClient and SellerClient, Lenders and Borrowers that defines the risks in a transaction. BuyerClient and SellerCLIENT alike can benefit from knowing more about the DueDiligenceDEAL process. The Comprehensive DueDiligenceDEAL; Value The Comprehensive DueDiligenceDEAL is not an appraisal process, the result is not intended to establish a value, although that may be a by product of the process. The goal is more to disclose risks, not to offer an opinion as to whether the borrower can provide the solutions. • Identify the risk. • Understand the causes. • Mitigate with solutions. The preparation of records and corporate documents in anticipation of a The DEAL create a successful objective to turn on the ability to close it quickly. It is not uncommon for a deal to fail to close because the BuyerClient don’t pull all the corporate documents related to the deal, valuable time may be lost and the deal may ultimately die. 2
Slide 3: The Comprehensive DueDiligenceDEAL For properties and Lands The BuyerClient shall check and revise all the circumstance related to this opportunity before paying his money. Accordingly, a SellerClient that prepares for the DueDiligenceDEAL process before a deal ever reaches the table is much better positioned to quickly move through the initial stages and ultimately close the transaction. At The Market of DEALS The Comprehensive DueDiligenceDEAL provides expert assistance in identifying and analyzing the risks of a transaction. The Comprehensive DueDiligenceDEAL process gives SellerClient and BuyerClient, lenders and Borrowers a clear picture not just of valuation, but also of cash flow and cash-flow preservation. It also creates a detailed analysis of each asset's ability to perform in expected and unexpected market and financial conditions. Most important, The Comprehensive DueDiligenceDEAL provides solutions to mitigate potential concerns of a lender or rating agency. The Comprehensive DueDiligenceDEAL; Tasks The Comprehensive DueDiligenceDEAL is one of the first steps when shopping a property, or a building, or when considering the purchase of a vacant land parcel, it can perform minimal tests and be subject to examine the asset carefully, to become well-informed, and approach the seller with Venditor attitude, Let the unprepared SellerClient beware an educated buyer! 1. Vacant Land for New development Property 2. Constructed property Vacant Land for New development Property On purchase a vacant land parcel the most common question a Developer BuyerClient asks is: “Where do I start?” Following is a partial list of necessary common tasks to purchase a vacant Land for a new development: • Land survey • Environmental site assessment • Soils • Utility connections • Bugs and bunnies, turtles and trees • Traffic study • Zoning/permitting • Wetlands/mitigation • Market survey • Competition study • Concurrency • Impact fees Constructed property When The BuyerClient decides to purchase an existing property, He needs to look at all the books and records, business-license requirements and the structural reports: • • • • • • • • Architectural, Structure and construction reports design and drawings Foundation reports Maintenance and services reports Location Mortgage Owners responsibility Zoning/permitting Market Survey HALIM HANI - Email: Email: alsalamahae@eim.ae - Email: halimhani@yahoo.com 3 ALSALAMAH International Trading & Marketing Est Mobile phone: +971 50 44 171 29 - Tel: +971 2 6456 856 - Fax: +971 2 6457 567 P.O. Box: 43944 - Abu Dhabi
Slide 4: The Comprehensive DueDiligenceDEAL For properties and Lands • • • Leasing Contracts End-User Monitors Insurance possibilities MARKET of DEAL Professionals Team At The Market of Deals, The DEALMAKERS provide the assistance of the entire Categories’ Members and work together to assemble The Comprehensive DueDiligenceDEAL before The BuyerClient find a property, not while the clock is ticking. Imagination, Information, Creation is The Consultant Industry and the hand tools for the DEALMAKERS to walk through the entire process and shop for best opportunity separately, followed and supported by Professional and Technical Teams as; • • • • • • • • • • • • • • • • • • Attorney Account auditor Architect Civil engineer Environmental consultant Feasibility consultant General contractor Insurance agent Land planner Management company Owner’s construction representative Property-tax consultant Real estate broker Soils engineer Surveyor Title company Traffic engineer Marketing advisor The DEALMAKERS At MARKET of DEALS shall create and Guide a Team of Professionals Experienced consultant to seek counsel in the different areas and to make sure that the SellerClient and BuyerClient are on the right track. The Comprehensive DueDiligenceDEAL; PROCEDURE LEGAL; While most consultants are not attorneys and can’t advise Clients in this capacity, The Professional Team assists you in making business decisions reflected in legal documentation SURVEY; The professional Team save time and money because the survey ordered shall meet the requirements of all Parties; SellerClient and BuyerClient, Lender and Borrower, Owner and Title Company TITLE; The Professional Team shall examine surveys and advise on business issues, as well as inform Clients of title exceptions that can reduce delayed closings if properly addressed. MUNICIPALITY REVIEWS; The Professional Team shall interview various government agencies in order to uncover new competitors, potential assessments and use issues. When conducting these interviews, a good consultancy may gain insight into possible changes in zoning that could affect a purchase. 4
Slide 5: The Comprehensive DueDiligenceDEAL For properties and Lands PUBLIC WORKS; The Professional Team will survey and check if any Street closings for maintenance or construction could be disastrous to traffic for long time —a compelling reason to pass on a deal. The professional shall evaluate and report before discovering after close of escrow that the street will be torn up in front of the property. POLICE REPORTS; The Professional Team shall investigate if any Review could uncover a highly negative reputation in a community that might not be disclosed by the seller. PROPERTY AUDIT; The Professional Team shall Conduct a thorough investigation and verification of reports can disclose property issues. On several occasions, an estoppels revealed that units counted as rented were actually abandoned, affecting the occupancy rate. Inexperienced auditors often fail to conduct a complete matching of computer records to actual physical status. MANAGEMENT REVIEW; The Professional Team shall check to Find if any theft, shrinkage or mismanagement can increase a pro forma cap rate. FINANCIAL REVIEW; The Professional Team shall review accounting reports used in financial statements, as Most properties prepare simple income and expose statements on a cash basis, with higher real paid cost at purchase stage. If a buying decision was made on a statement that understated expenses due to a large accounts payable balance, one might overpay for a property. Conversely, if one-time, non-recurring expenses were charged to maintenance and repairs to limit tax liabilities, transfer and brokerage fees, the net operating income would increase, creating value. Cap rate comparison is the most essential element of the financial review. MARKET STUDY; The Professional Team shall make complete marketing study to evaluate the real incomes. Where are rental rates compared to competing properties? Where is room for improvement? Are there risks based on overstated rents? Sometimes brokers increase revenues and occupancy in the pro forma revenues, based on unfounded speculation. If a property is at 70 percent occupancy in a stable market after four years of operation, what is the genesis or logic of pro forma occupancy at 85 percent or 90 percent just because of an ownership change? Rarely do brokers take the time to investigate market conditions enough to make educated assumptions. The Comprehensive DueDiligenceDEAL; Evaluation The Comprehensive DueDiligenceDEAL reduces the risk in the acquisition, standardized pricing, error and omissions insurance. The multiple staff members who can respond to meet the limitations of the evaluation period Conduct different offers which allow SellerCLIENT and BuyerCLIENT to choose services they need to close up the deal after the Evaluation is complete and controlled by the Professional of the MARKET of DEALS Through: • • The Comprehensive DueDiligenceDEAL Insurance at the Market of Deals The Comprehensive DueDiligenceDEAL Finance at The Market of Deals The Comprehensive DueDiligenceDEAL; DEALS INSURED HALIM HANI - Email: Email: alsalamahae@eim.ae - Email: halimhani@yahoo.com 5 ALSALAMAH International Trading & Marketing Est Mobile phone: +971 50 44 171 29 - Tel: +971 2 6456 856 - Fax: +971 2 6457 567 P.O. Box: 43944 - Abu Dhabi
Slide 6: The Comprehensive DueDiligenceDEAL For properties and Lands DEALS will be insured and covered by different kind and type of insurance suitable to each deal. This insurance is tailored to the best of Breed solution providers; their explicit focus is monetizing the power of insurance with delivery capabilities across multi channel of insurance companies, professional and underwriters’ convergent platforms in the rapidly evolving global marketplace. Deals supported by Global leader in insurance financial guarantees and credit enhancement for issuers, asset managers, financial institutions and insurance companies. Through creative use of structured products and securitization technology, they tailor solutions that: protect the DEAL for Buyer and Seller, facilitate the structuring and distribution of securities and improve liquidity for investors. Our partners will provide insurance financial guarantees on DEALS backed by structured modeling that generate cash flow. These are usually "off-the-run" insurance policies that involve corporate risk, and they often guarantee Deals for Decision Makers with unique business models or private equity sponsorship. Our Partner main commercial product groups include Trade Receivables, Equipment Leasing, Operating Assets (e.g. marine cargo containers, gas pipeline compressor leases), Entertainment Assets, Cinema production , Franchise/Secured Small Business Loans, Intellectual Property/Royalty Payments, Real Estate, Commercial Mortgages, Barter, Auction and other corporate-related assets (including natural resource-based) with predictable cash flow streams. MARKET of DEALS will help DEALMAKERS grow their business worldwide through secured and optimized trade receivables management Our Partner insures the Deals against losses arising, Compensation for losses due to buyer insolvency, Losses on unpaid trade receivables covered by insurance policies are indemnified at a rate agreed between insurer and Client. The financial strength of MARKET of DEALS is a guarantee in protecting the assets of its insured clients. The Comprehensive DueDiligenceDEAL; DEALS FINANCING OPTIONS There are a number of financing options that MARKET of DEALS considers when seeking to match a Bidder to Auction. The criteria MARKET of DEALS employ calls for a win-win situation in which both company and finance source have clear benefits. Some of the types of financing we are proficient at include Finance to BuyerClient protect by tailored Deals Insurance. The Comprehensive DueDiligenceDEAL Execution And finally The Comprehensive DueDiligenceDEAL shall be transfer for execution through: • • • • DueDiligenceDEAL DirectDEAL Or DueDiligenceDEAL BarterDEAL Or DueDiligenceDEAL AuctionDEAL Or The Consolidated Consortium 6
Slide 7: The Comprehensive DueDiligenceDEAL For properties and Lands With Best Regards MARKET of DEALS TEAM Halim Hani HALIM HANI - Email: Email: alsalamahae@eim.ae - Email: halimhani@yahoo.com 7 ALSALAMAH International Trading & Marketing Est Mobile phone: +971 50 44 171 29 - Tel: +971 2 6456 856 - Fax: +971 2 6457 567 P.O. Box: 43944 - Abu Dhabi