CONTI Acquisitions Process: An Overview
Successful real estate acquisitions begin with a proven process, adhere to a strategic plan, and are built upon deep knowledge of the industry and markets. CONTI has a 175+ point acquisition process that has been continuously refined for more than 12 years and through dozens of multifamily purchases in order to maximize the potential value of each property. This meticulous scrutiny, in its simplest form of categorization, is comprised of Screening, Underwriting, Offers/Contract, Due Diligence, and Closing.
Every acquisition at CONTI begins in Screening, where potential investment opportunities are filtered through CONTI’s carefully selected criteria. Potential investments are typically sourced through broker listings and deep, long-term relationships with industry participants. Properties that pass CONTI’s acquisition criteria move into Underwriting and are assessed for value by the Acquisitions team using CONTI’s proprietary model. During Underwriting, the Acquisitions team will evaluate and underwrite the property’s financials, tour the property in person to assess the physical condition and operational efficiency, and complete a market study of the property’s neighborhood to evaluate the quality of similar properties and the local submarket. During this time, the Acquisitions team will also obtain quotes for debt, taxes, and insurance to finalize Underwriting. Once through Underwriting CONTI will prepare and submit a non-binding Letter of Intent (“LOI”) to purchase the property. If accepted, CONTI will negotiate and execute a Purchase and Sale Agreement (“PSA”) with the Seller.
When an agreement to purchase the property is reached, the Acquisitions team will begin our rigorous and thorough Due Diligence process which includes a physical inspection, lease audit, and financial audit. During physical inspections, 100% of unit interiors are entered and inspected through our 125+ point checklist, all exterior components are inspected and evaluated (i.e. roofs, mechanicals, parking lots, foundations, etc.), and a comprehensive lease audit is performed. CONTI’s lease audit includes a thorough review of the lease files for 100% of tenants living on-site, evaluating the accuracy of records, and tenant credit quality. At the same time, the Acquisitions team will complete a detailed financial audit of the Seller’s records including items such as rent rolls, general ledgers, and profit & loss history. Only once this inclusive, rigorous evaluation is complete can CONTI have informed discussions with our Investment Committee.
CONTI’s internal Investment Committee is comprised of a diverse team that has been updated at key points throughout our process to ensure alignment and transparency amongst key decision-makers. Through multiple meetings, this committee assures every aspect of our vertically integrated business has an equal voice in our decision to purchase or pass on an investment.
Once a property passes CONTI’s Due Diligence, the Acquisitions team works diligently to ensure Seller compliance throughout the contract period and financing is properly secured. As Closing approaches, Acquisitions concentrates on facilitating a smooth transition of ownership. The team prepares closing documents, legal entities, and operating agreements while also coordinating communication between the Seller and CONTI’s property operations teams. Once the property is closed, the Acquisitions team will transition its process involvement to property our Property Management and Asset Management teams, where their processes take over and execute the property’s business plan.
CONTI’s acquisition process is a proven model that has been tested and improved across $1B in multifamily transactions. It is subject to our continuous improvement approach and provides a guide to how we identify, evaluate, and select the best opportunities for our investors. Look for future articles where we will discuss parts of our acquisition process in more detail.