Watch this 11-minute webinar replay to learn how Valuate can help you:
- screen investment sales properties more quickly
- make fewer mistakes
- collaborate more easily with your counterparties
You’ll also learn how to get 50% OFF a Valuate subscription — promotion available through November 10th only
Transcript below:
Welcome, this is Bruce Kirsch, founder and president of Real Estate Financial Modeling, thanks for joining
We have a terrific webinar for you today, we’re going to talk about Valuate, REFM’s web-based property financial analysis and property transaction marketing platform, and how it can make you more efficient in screening properties by streamlining your workflow, and enhance your collaboration internally and with your partners. The results of using Valuate will be increased productivity, improved insights, and more time and energy to use your judgment as a businessperson instead of to just verify that the numbers are adding correctly
Let’s go ahead and get started
What I would like to talk about just for a moment is the evolution of how investment sales properties have been analyzed from a financial point of view and marketed over time
Everything used to be done in hard copy, by snail mail, and by hand with pencil and paper — the marketing communications, the offering memo itself, the deal room, and the financial analysis
Over time, we graduated to an electronic and digital format, where confidentiality agreements were transmitted by fax, and the offering memo was made available in a PDF file in addition to being disseminated in hard copy, the deal room moved to a CD-ROM disc, and financial analysis moved onto Lotus and Excel
The last major transition has made everything digital, where marketing communications are sent out via blast email, the Offering Memorandum is almost exclusively in PDF, which we then print, and the deal room now sits in the cloud
The financial analysis has come to include ARGUS in addition to Excel, and Lotus has disappeared… and so this is where Valuate enters the equation and the workflow
Unfortunately with financial analysis there are a lot of frustrations. The three biggest frustrations with the financial analysis activity, all of which potentially decrease the profitability of investment principals and their partners, are that it just takes too long to run and rerun analyses, we make too many mistakes and omissions, and it’s really hard to keep track of the different versions of the files, and which was shared with whom internally and externally, and this hurts our collaboration efforts, and this naturally leads to wasted time and energy, and we all know that spending our time and energy wisely is half the battle when pursuing transactions. And as we all know, time kills deals, so we don’t want to waste time
Valuate gives you an advantage by helping you to work faster, preventing mistakes and omissions, and making file tracking and collaboration a lot easier. It serves for buyers as the ultimate deal-screening tool, providing what has always been sought but never before achieved in commercial real estate, which is pro-forma precision at back of the envelope speed, on all bases: unlevered, levered as well as joint venture
Valuate does so on what is the 2nd second half of the financial analysis process, where the first half is generating the property-level operating cash flow projection, and the second half is applying purchase, sale, debt and equity and JV mechanics
In the case of financial analyses of acquisition and disposition of existing retail, industrial and office properties, Valuate replaces the use of Excel, acting as a companion to ARGUS
And in the case of financial analyses for the acquisition and disposition of multi-family, hotel and self-storage properties, it replaces the use of Excel for that second half of the analysis
Let’s go ahead and get onto the platform
The first thing you’ll notice here on the Dashboard screen is that there is a clean, crisp, polished presentation, which you will find to be well-labeled and very intuitive to navigate
What we’ve done here is taken the some of the familiar conventions of an Excel spreadsheet, such as the formatting of inputs in bold blue type, and we’ve allowed a lot of those elements to transfer over to the Valuate interface so it feels natural to work with
The Dashboard screen is a hybrid input and reporting screen, and provides the perfect Executive Summary view of the transaction. There are three other input screens, and we will show you those as well in a moment. They are Cash Flows, Purchase/Sale, and Sources of Funds
What’s productivity-enhancing about Valuate is that we made key transaction analysis inputs editable by you right here on the Dashboard, so if you don’t want to go anywhere else in the application, you don’t have to — you can manipulate 80% of the deal drivers from this single screen and see the investment returns key performance indicators adjust in real time
Inputs can be changed rapidly, and you have useful elements in Valuate that you don’t have in ARGUS and Excel such as how this unlevered summary table automatically regenerates to terminate as of the new forward year of a selected property holding period. We don’t have that level of presentation or interactivity with the other software options
And so now I’m back to showing the monthly-based eleven-year analysis timeline
Everything currently showing above the fold here is the unlevered analysis, and below the fold we have the levered analysis section
To be clear, Valuate runs these analyses based on the manual importation of a set of monthly operating cash flow projections directly from either ARGUS or Excel
The user imports the cash flows on the Cash Flow screen, and then Valuate integrates the purchase, sale, debt and equity elements, all computed at a monthly-level of granularity and precision
Let’s go to the Cash Flow screen now, and I’ll show you how easy, quick and painless it is for you to bring in the cash flows
Let’s say you have a monthly projection in Excel — you simply select the entire relevant area of the tab, hit Ctrl+C, toggle back to Valuate, paste with Ctrl+V, and then click the Process Cash Flows button. And In under 10 seconds, the cash flows have been read into the Valuate system
So everything is in the application as of this point
The biggest time-saver and best part is that no matter what the unique collection of line items is that you have coming from your own analysis or that of a broker, Valuate accepts them all and finds the subtotal lines automatically — there is no reconciliation or vetting of totals needed whatsoever. This is a huge step forward from spending 15 to 20 minutes carefully checking to make sure that each line item was mapped properly to an Excel file in the case of an ARGUS output, and then validating manually that all of the subtotals and totals tie
Next is the Purchase/Sale screen, where we can provide more detail on acquisition costs, as well as include Acquisition and Disposition Fee inputs.
The Purchase Price can naturally be updated here vs. what was input on the Dashboard screen, and a time-saving feature is that whenever you update a variable in Valuate, if it also exists elsewhere it will update there as well. So for instance if I were to update the Purchase Price here, this new amount will automatically override the previous price input on the Dashboard
Last is the Sources of Funds screen, where we can size an amortizing or interest only senior loan quickly based on either Loan To Cost test or Debt Service Coverage Ratio test, and we can also effortlessly create joint venture partnership structures of up to three players
Here we’re showing a loan sized by Loan To Cost, and a two equity player transaction. To introduce a third player and create a double-promote structure to the Sponsor, all we have to do is change this input from two to three, and Valuate does the rest of the work.
So now we’re showing three players and we can resize the equity contributions with this very convenient slider bar, and Valuate will re-run, and then simply give the new player a name
To remove the third player, a normally involved and messy process in Excel, we would simply change this back to two players and it’s done
Keeping the three-player structure intact, let’s scroll down and see how quick, easy and foolproof it is to define the waterfall profit sharing structures among the three players.
The first set of boxes here is for the Sponsor and Third Party Investor, and the second is for the Sponsor and its Equity Partner. To change the number of tiers in the Waterfall, all I do is this and the table will adjust automatically, and I can then update the hurdle rates and promotes if I need to. There is no way to mess this up, where in Excel it’s potentially treacherous to change the JV setup
The gains that Valuate brings to collaboration are also astounding. Once you have a file that you are ready to present, you simply click the share button, and a separate private copy of the file will be generated for you to share with your partners, who can then log in and manipulate inputs individually and privately, all without impacting your copy of the file. This can be done while on the phone, reduce a lot of the back and forth, compressing the timeline of a discussion or a negotiation. With Valuate, it’s click and call, and everyone’s on the same page
While you might not believe it, you can actually do everything that we have shown you so far right from your Internet-connected phone or tablet while you’re in a taxi or waiting for the subway, everything of course other than pasting the cash flows. The time savings that Valuate can help you achieve by allowing this access from mobile devices are massive
Once you get your hands on the platform, you’ll see why top real estate investors are telling their investment sales property brokers to “Valuate it” and share deal analyses with them that way
Valuate is a monthly subscription service, priced at $149 per user per month. Our offer today is a premium subscription pre-sale of 6 months or 12 months of access at 50% off, which is the deepest discount we will ever offer
This is either $447 or $894, and the bonus that’s being offered with 6 months of access is a $500 coupon towards any other digital REFM product, such as our Excel templates which can be used seamlessly with Valuate. The bonus offered for a presale purchase of 12 months of access is a $1,000 coupon