Home / INVESTMENT PROCESS (table of contents)
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STEP
DESCRIPTION OF STEP
STEP OUTPUT
STEP DELIVERABLES
Step 1:
Deal Origination
Identification of investment opportunities, possible targets for investment etc. The committee from time to time will review the characteristics tables to prequalify possible targets in a written decision.
Pre-qualification Decision
Business Plan of the AIF Compartment
Market and Industry Review
Pre-qualification Memo
Deal Team set up Document
Committee Prequalification Decision
Step 2:
Initial Evaluation
Preliminary investigation, Collation of Data, Preliminary Analysis and Financial Modeling.
Investment Evaluation
Preliminary Investment Memorandum (PIM)
Title deed
Searches
Valuation
Licenses (if any)
Main Documents according to the sector
Term Sheet
Committee Investment Evaluation Resolution
Step 3:
Risk and Legal
Share with Risk and Legal the Investment Recommendation with all the documentation. Risk Recommendation and Legal negotiation and term sheet correction.
Risk Report
Risk Memo sent to the AIFM for provision of a Risk Report.
Legal Memo sent to AIFM.
Step 4:
Due Diligence
Perform Due Diligence in all necessary aspects.
Due Diligence Reports
Due Diligence Reports
Step 5: Recommendation
Collate all reports above and makes an investment recommendation if any toward the Board of Directors and the Manager.
Board Recommendation
Final Investment Memorandum (FIM)
Step 6:
Board Recommendation
If the Board of Directors agrees with the Investment Committee collates the information and makes its Investment Recommendation to the Manager.
Board Recommendation
Investment Recommendation Resolution
Step 7:
Decision
If both the Board of Directors and the Investment Committee makes a recommendation for Investment the manager may proceed with the Investment.
Investment Decision
Board Resolution
General Contents of Documents
AIF Business Plan Strategy, risk management, cost control, resources.
Market Review
(a) Average Rents per Unit or Square Foot
(b) Annual Growth in Rents
(c) Occupancy Rate
(d) Expenses and Net Operating Income (NOI) Margins
(e) Required Capital Expenditures
Prequalification Memo
A memo explaining the reasons for the selection of the target property/project.
Deal Team Set Up Document
Specifies the names and skills of the team that will handle the deal flow.
Preliminary Investment Memorandum (PIM)
The preliminary is compiled to summarize the investment opportunity to the Investment Committee. Sections in the PIM typically include:
Executive Summary: Details of the proposed transaction, background, and overall deal team recommendation and investment thesis.
Asset Overview: Rent roll, Vendor contracts, Historical analysis etc.
Market Overview: Market analysis (occupancy, absorption, construction and rental rate trends)
Financial Overview: Historical and projected income statement, balance sheet, and cash flow statement analysis.
Risks and Key Areas of Due Diligence: Potential risks to the property/project and key areas of completed and ongoing due diligence.
Valuation Overview: Property valuation report from chartered surveyors.
Exit: Initial thoughts on investment exit options and anticipated timing of exit.
Recommendations and Proposed Project Plan: The deal team will recommend proceeding with their proposed project plan based on a specific valuation range and the budget approved by the Investment Committee. The project plan will include the hiring of third-party consultants to perform commercial, financial, tax and legal due diligence
Term Sheet
Risk Memo
Initial Description of the general risk profile of the target and identification in the view of the committee of all the risks involved in the investment (transaction risks/liquidity risks) and the property/project (business risks).
Legal Memo
Description of the legal position of the property/project especially regarding any issues of Title Report:
(a) Liens
(b) Assessments
(c) Easements
(d) Access
(e) Environmental
Due Diligence Reports
a. Financial
b. Physical
c. Operational
d. Tax
e. Environmental, Health & Safety
Final Investment Memorandum (FIM)
A FIM is essentially the equivalent of a PIM that also includes further due diligence from the deal team and third-party consultants, and specifically addresses the key issues introduced by the Investment Committee from the PIM.
At this stage, the deal team will recommend acquiring the target property at a specific valuation, which the Investment Committee will either reject or approve.
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