Transaction process optimization driven by high investment activity

Poland’s warehouse real estate market is entering the next stage of its growth cycle. Tomasz Kostrzewa, senior investment director at Capital Markets at 7R, explains how to best manage due diligence processes during times of increased demand for investment in warehousing.

The latest data clearly show that the warehouse sector has not only proven resilient in the face of significant market turmoil stemming from, among other factors, the COVID-19 pandemic, but has also capitalized on the upheaval. As a result, the market continues to set new records, as growing market demand is matched by correspondingly high levels of activity and growth among developers.

Investors don't want to wait

Consequently, the number of so-called single-asset transactions increased significantly. To keep pace with growing investor demand, it was essential to improve the way transactions were conducted, including at the pre-transaction due diligence stage. The volume of such transactions is now unprecedented, and they are often carried out on a much larger scale.

When an investor evaluates multiple individual projects simultaneously as part of a portfolio transaction, the due diligence process must be conducted for the entire group of properties at the same time. Furthermore, since it is possible that any building of interest could be sold separately at any time, the transaction process should not interfere with the ongoing due diligence studies for the remaining properties.

Interdisciplinary approach

As Tomasz Kostrzewa points out, to ensure that the due diligence process runs smoothly and efficiently, it should begin at the start of the development. This approach, known as “vendor due diligence,” involves conducting due diligence throughout all stages of project development, right up until the sale is finalized.

A team of staff carefully selected to manage the process is yet another factor that ensures efficient and reliable property due diligence. Specialists from a variety of fields—including legal, tax, and technical—must be involved on the seller’s side when coordinating due diligence.

This interdisciplinary approach on both sides makes it even easier to conduct due diligence during the property analysis process leading up to the acquisition. –The buyer wants to know exactly what they are getting. The buyer may have certain assumptions about the project, and due diligence allows for validating them. That is why at 7R we make every effort to ensure the process is carried out in an agile and reliable manner –explains Tomasz Kostrzewa.