Real estate investment banking;

by | Apr 5, 2012 | Investing

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Property investment is a booming business at present. People engaged in construction, insurance, mortgage banking and rental estate appraisals, as well as brokerage and leasing belong to the group of real estate investors. There are both corporate, as well as private real estate investors. The corporate real estate investor is involved in investing money for the sake of corporate requirements. For example, the construction of office, institution, organizations and banks are regarded as corporate investment. Real estate lending in commercial banks, savings and loans are a common phenomenon. Investing in real estate is a rewarding experience. It is also a challenge for the investor. A vital part of rental property investment is real estate investment banking.

Pioneering method to real estate financing: Rental property investment banking involves structuring real estate projects, in order to comply with specific legal and tax requirements. In this case, bank investors underwrite for companies that issue securities. They also give advice to the companies on the issuance and placement of its stocks. The best execution involves divulging every financing opportunity to the broadest possible targeted investor base.

Various methods of capital growing: Real estate investment banking groups have different methods for capital development of real estate investment trusts (REITs) and real estate operating companies (REOCs). Help from advisory financial agencies may be obtained for structuring joint ventures, initiating, and negotiating acquisition issues through authentic financial advisory services.

Syndication: Currently, large sized investments and transactions are not possible without a syndicate. There are some key aspects of syndication. They are speed of execution, in-depth knowledge of capital market, diligence process, certainty of funding, detailed financial analysis and modeling of financial aspects. Apart from syndication, other essential elements are securitization, and dedicated real estate investment banking expertise. Their function is to provide a wide array of advisories to clients, underwriting skills, arrangements, and structuring which are related to real estate transactions.

While analyzing the market for rental property investment, for property investment/ real estate investment banking, the following things are to be considered:

  • Situation of the Market: It tells volumes about the present economic situation. It also provides a glimpse of sector specific trends.

  • Legal framework and its function: It gives an idea of the legal structure of tax law, special purpose entity, construction law and contract law.

  • Fundamental technical prerequisite: It informs you about the contract award procedures, planning, and construction cost calculation.