Process

The goal of Partners Real Estate Fund is to help students gain real world experience. We follow a process similar to most real estate investment firms. At the top of our funnel, we quickly screen deals to see if they meet our investment criteria and have sufficient potential to warrant further investigation. If a deal meets our criteria it is moved to the initial due diligence phase where more information is gathered. If the project still looks promising after the initial due diligence, the project is fully underwritten and presented to the investment committee. In an average semester, students screen about 25 potential investments, do initial due diligence on 10 of them, underwrite 3 or 4 and present 2 or 3 to the investment committee.

Deal Screen

Deals are screened with respect to asset type, location, expected returns, valuation metrics, demographics, and the competitive landscape. For a deal to advance to the initial due diligence phase, at least 2 analysts must approve the move to the next step.

Initial Due Diligence

The due diligence process is rigorous and can be difficult because of the lack of information. Analysts examine the demographics of the location and surrounding areas, verify zoning and entitlement issues, find comparable properties and gather information on rents, cap rates, and other key metrics needed to properly evaluate the feasibility of an investment.

Underwriting

Only the cream of the crop make it through the deal screen and initial due diligence phases. During the underwriting process, no stone is left unturned and no question unanswered . A detailed model is developed to validate assumptions and forecasts. A detailed sensitivity analysis is performed to examine different scenarios and outcomes.

Presentation

If everything looks good after the project is thoroughly underwritten, analysts prepare a detailed presentation to make recommendations to the investment committee. Investment committee members grill the analysts during the presentation and decide whether more information is needed or how to proceed given the recommendation of the analysts.

Investment

Once the investment committee has signed off on a deal, the fund coordinates with partners and investors to finalize the investment.

Monitoring

After an investment is made, analysts monitor the investment regularly and compare the realized numbers with the forecasted estimates from the underwriting process. We are always striving to improve our processes and analysis – checking back in on previous investments is a critical step to help us improve.