Investment activity drives the optimization of transaction processes

The Polish warehouse real estate market is entering a new phase of development. Tomasz Kostrzewa, Senior Investment Director of Capital Markets at 7R, explains how to manage due diligence processes during a period of heightened investment demand.

The latest data clearly show that the sector has not only proven resilient in the face of severe market turbulence (resulting, among other things, from the COVID-19 pandemic), but has actually benefited from it. As a result, the market is setting new records, as developers’ activity is growing rapidly alongside rising demand.

As a result, the number of single-asset transactions has increased significantly. To keep pace with investors’ growing appetite, it was therefore necessary to streamline transaction processes, includingdue diligence,whichis now conducted far more frequently and on a much larger scale.

When an investor is evaluating several individual projects at the same time (a portfolio transaction),due diligence mustbe conducted on this group of properties simultaneously. Additionally, it must be anticipated that any of the buildings could be sold at any time, and such a transaction must not affect the analysis of the remaining projects.

"To ensure that this process runs smoothly and efficiently," emphasizes Tomasz Kostrzewa, "due diligence should begin as soon as the project is launched. This is known asvendor due diligence—an analysis of the project that continues throughout all stages of implementation, right up until the sale is finalized."

Another key factor in ensuring an efficient yet thorough analysis of the asset is a carefully selected team responsible for carrying out the process. This means that the individuals coordinating the due diligence on the seller’s side must include specialists in a wide range of fields, from legal and tax to technical. –It is important to remember that during the sale transaction, on behalf of the buyer, the project is examined by professionals from various industries. That is why it is important for the seller’s team to be equally diverse. 7R brings together specialists from many fields—from negotiators and financial experts to engineers—making the creation of such a team a natural part of our due diligence process,” says Tomasz Kostrzewa.

The interdisciplinary nature of both teams makes it even easier to exercise due diligence during the property analysis process prior to acquisition. “The buyer wants to know what they’re buying. They have certain assumptions about the project, and due diligence allows them to verify those assumptions.That’s why at 7R, we make every effort to ensure this process is carried out efficiently and reliably,”the expert emphasizes.