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| Broadway Process |
A number of key investors (both debt and equity) have participated with Broadway in multiple transactions. The firm's equity partners represent a cross section of both domestic and international institutional and private investors. Lenders have included most of the world's largest financing institutions.
Broadway Partners follows a disciplined investment and management process in order to minimize risk while maximizing investor returns. |
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| Extensive Deal Sourcing & Screening |
Our objective is to see every transaction in our markets. We do so by maintaining a wide base of brokerage and owner contacts in our target markets, and are often shown transactions before they are openly marketed.
Broadway screens its pipeline for assets based on the following key criteria:
- Submarket Dynamics: the demand resilience and structural supply limitations
- Physical Attributes: the property's quality and condition relative to its peers
- Location Features: the accessibility, prestige and convenience of the location
- Tenant Quality: the credit, diversity and stability of the rent roll
- Financial Elements: the risk-return (current and overall), ability to finance
Our extensive pipeline combined with our focused investment strategy allows us to be extremely selective on the deals we bid and buy. |
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| In-depth Market & Investment Analysis |
| Broadway Partners identifies unrecognized market opportunities using fundamental "Bottom-Up" property analysis combined with a research-based "Top-Down" market analysis. We believe significant investment opportunities arise when actual market risk is materially lower than perceived market risk. Broadway Partners has a successful track record of investing in office properties where such an imbalance exists. |
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| Fundamental bottom-up property analysis combined with a research-driven top-down market evaluation strategy, executed within a disciplined and active portfolio management framework. |
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| Thorough Due Diligence & Prudent Underwriting |
Broadway Partners conducts systematic due diligence throughout the bid process which involves synthesizing market and property analysis, independently corroborating all seller-provided information, confirming pricing assumptions, and coordinating external legal and engineering expertise. Broadway incorporates its findings into its underwriting that prudently reflects both the risk and opportunities related to a potential acquisition. The primary areas of due diligences that Broadway Partners focuses on are:
Market Due Diligence
- Interview and market tours with numerous leasing brokers in both the MSA and submarket;
- Review and analysis of local real estate market reports (current and historical) including local newspapers and business periodicals;
- Review and analysis of economic data;
- Interviews with local real estate owners, developers, and attorneys.
Property Operating Diligence
- Review historical operating statements and budgets, rent rolls, tenant recovery billings, receivables, real estate tax and utility bills, service contracts, employee resumes, and other receipts and reimbursements;
- Interviews with all major tenants;
- Procure property appraisal;
- Review pricing with major service providers
- Build pro-forma budget using market information, historical numbers, input from third party management firms and owners;
- Review all leases and lease correspondence and estoppels, including abstracting by outside counsel;
- Re-build Argus financial model from scratch using all underwriting information, and confirm new model ties with pricing.
Property Physical Diligence
- Procure Property Condition Report and Phase I Environmental Report, including reviews of ADA compliance, Plans and Specs, Licenses, Permits, Warranties, Fire Code compliance, and Certificates of Occupancy;
- Retain discipline specific consultants (MEP, Structural, Elevator) to review property condition and preventative maintenance programs; estimate base building capital expense needs;
- Review and analyze historical base building and leasing capital expenses.
Property Legal Diligence
- Legal review of all title, survey, entitlement, and zoning issues;
- Review of property historic litigation and insurance losses
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| Optimal Capital Structure |
An unusual convergence of events has occurred to create substantial financing opportunities for sophisticated real estate investors and lenders:
- Lowest Interest Rates in 40+ Years
- Efficient Capital Markets - Providing liquidity and easy access to debt
- Mature Office Markets - Major markets with high barriers to entry where property values continue to appreciate.
Broadway Partners seeks to take advantage of the current debt environment and use leverage strategically, not only maximizing its benefits, but also minimizing its risk.
In addition, we seek to optimize capital structure throughout our ownership term, by:
- Maximizing flexibility to accommodate capital events,
- Minimizing debt service costs, and negotiation.
Broadway develops and maintains direct relationships with lenders of varying specialty and focus, including:
- Investment Banks
- Portfolio Lenders
- Life Insurance Companies
- Local Banks
- Mezzanine Investors
- Foreign Banks
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| Proactive Asset Management & Investor Reporting |
Broadway operates and manages assets to both a) maximize cash flow and b) improve certainty in tenancies, lease terms, operating expenses and asset condition. With this in mind, Broadway creates an annual Budget, laying out the annual objectives that will be achieved that year in terms of:
- Property Improvements,
- New Leasing and Renewal Targets, and
- Operating Savings.
Broadway continually tracks and evaluates how well these objectives are being met and issues quarterly investor reports. |
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| Strategic Refinance and/or Disposition |
Broadway Partners maintains business plans for each asset so that sale or strategic refinancing opportunities are continually considered and anticipated. We determine the appropriate holding period and capital strategy based on a coordination between property-level events (such as a refurbishment or major lease renewal), and opportunities in the sales and financing markets.
Target Hold
Our typical projected hold is from 5-10 years; however, we have a track record of successfully expediting value creation strategies and executing early capital events after only 1-3 years.
Strategic Refinancing Strategy
Our initial financing reflects our strategy for managing the asset and the underlying leases, and we continuously monitor our portfolio to take advantage of refinancing opportunities. We rely on a basic principal in financing, which is to match the term of the asset with the term of the leverage. For example - if upon acquisition a property has significant near-term roll-over, and potential for short-term value appreciation, we will initially finance with fixed or floating short-term debt. Once the releasing is near complete, with long-term stable leases in place, we will seek to refinance with long-term financing. |
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