Sourcing Investment Opportunities
Investment opportunities are sourced from the real estate professional community (representing national, regional and local brokerage firms), private and public real estate owners, the investment banking community, institutional ownership (represented by insurance companies, pension funds and banks and bank trustees) and others. Other transaction sources also include professional service firms (such as law firms, accounting firms and title companies) and leads generated internally through our professionals.
The principals of Ravinia have completed multiple transactions with various institutional and private real estate investors, each with a different investment objective. Our strategic partners, representing investment firms and high net worth investors that have invested alongside Ravinia, provide both capital relationships as well as sources of new transaction flow. These relationships extend over a decade and remain a source of repeat business.
Ravinia does extensive econometric research to identify which investment target markets will deliver the highest risk-adjusted return. This includes cross-referencing real estate supply and demand characteristics with employment and income growth characteristics. We couple this economic research with our local experience in these markets and invest in property markets that consistently remain attractive to the institutional investor as well as the private investor. These market factors magnify the probability that numerous exit strategies exist for our investments.
Ravinia undertakes an extremely disciplined investment process in order to generate additional Alpha while minimizing risk. Ravinia also “sizes” our investment in the local market in order to maintain risk diversification. We never over-allocate investment dollars to smaller markets, for example.
Preliminary Financial Analysis and Review
Once an investment opportunity has been identified for review, Ravinia develops a thorough financial underwriting and sensitivity analysis that includes pro forma cash flow, capital expenditure budget, various investment hold periods, and a range of exit values. Ravinia's professionals also speak with industry experts to gather preliminary due diligence such as market and property information and formulate investment/exit strategies.
Once Ravinia executes a sales contract to acquire the real estate, we review, verify and analyze all financial and accounting information. The due diligence information that is generated serves a dual purpose; to be utilized by the acquisitions team and eventually by management during the ownership transition period.
Ravinia also conducts comprehensive lease reviews which are abstracted and audited against the seller’s property-level rent rolls. Third-party engineers and environmental firms are also engaged to provide independent confirmation of property information to satisfy mortgage lenders and investors. The transaction closing typically occurs 30-60 days from the end of a contractual due diligence period.
Optimizing Financial Leverage
Ravinia constantly reviews its ability to refinance and rebalance our real estate investment portfolio with more flexible or lower cost financing. We attempt to match-fund the maturity of any debt financing with our value-improvement strategy. To the extent we can improve the real estate investment’s performance in the short term; we will initially finance the property with short-term, pre-payable debt, only to refinance with longer term debt once our property financial objectives have been achieved.