Due Diligence Checklist: Real Asset/Real Estate
Purpose
The purpose of an investment due diligence check list is for an investor to make sure that they have completed full due diligence on a potential investment opportunity. In order for an investor to make a well-informed investment decision, they typically have a standard set of questions and required information that they need to review before they are willing to make an investment. The areas covered in a due diligence check list are related to helping an investor make a reasonable decision about the risk adjusted return of an investment opportunity.
| CAPITAL SEEKER/ISSUER REQUIREMENT | INVESTOR GOAL |
| Provide as much transparency as possible in order to allow the investor access to complete information | Maximum transparency in order to make an informed investment decision |
| Provide information that supports investment return potential | Demonstrated return potential |
| Provide risk and mitigation information | Demonstrate an understanding of and mitigation for potential risks |
Real asset/real estate due diligence focuses on the characteristics of the underlying assets as well as the corporate structure which means that both the corporate structure and asset characteristics are covered in the due diligence check list.
Covered Topics
The Due Diligence check list typically covers standard topics such as (see full sample due diligence check list here):
- Issuer/Property Overview
- Governance/Team
- References/Vendors
- Presentations/Investor Communications/DDQ
- Company and Financial Analysis
- Physical Property Inspection and Review
- Tenant/Lease Matters
- Securities/Offering Documents
- Regulatory/Compliance/Operations
Having well-constructed and complete information on these basic topics provides the information that an investor requires in order to complete their due diligence process.
Result
The result of well-constructed and complete due diligence information is a seamless and well received capital raising process which increases a capital seeker/issuer’s chances to raise capital. Investors respect and appreciate thoughtful due diligence information since it shortens their due diligence process significantly meaning they are able to make an investment decision more quickly.
Given most capital seeker / issuer’s preference for a quick and seamless capital raise – investor and capital seeker / issuer’s interest to have a seamless due diligence process, the capital seeker /issuer and investors interests are aligned in having complete due diligence information.
