Strategy & Transactions

Today’s evolving real estate market presents investors with a new set of opportunities and challenges when acquiring, disposing of or holding real estate assets. Decision makers should equip themselves with an in-depth understanding of values, real estate fundamentals and structuring alternatives.

Global public and private real estate companies, including owners/developers, REITs, financial institutions, private equity funds, insurance companies, family offices, governments, as well as origination and securitization lenders, can find top expertise in:

Transactional Strategy

• Transaction structuring and development of a capital markets strategy
• Offering memoranda and investment books; historical and prospective cash flows
• Strategic observations and operational consulting

Due Diligence

• Corporate-level merger and acquisition due diligence; property and entity-level due diligence
• Working capital reviews
• Site inspections and tenant interviews
• Market assessments
• Property, portfolio and enterprise valuations; expense recovery analyses (e.g., operating expenses, real estate taxes, capital improvements, CPI escalations, porters’ wages, HVAC); and real estate tax assessment review

Financial Analysis for Portfolios and Single Assets

• Financial statements; operating statements; and rent rolls

Financial Modeling

• Asset- and portfolio-level cash flow and DCF
• JV and promote modeling for IRR and return analyses and track records
• Public-to-public, private-to-public and public-to-private pro forma modeling
• Development deal pro formas (highest- and best-use analyses)
• Sensitivity analyses (pre- and post-tax)
• Contracts, agreements, site inspections and closing statements

Loans; Mortgages; and Servicing Histories

Tax Attributes

The RES Structures and Analytics team has earned a reputation as an industry leading problem solver for complex real estate investment structures. Our unparalleled financial modeling expertise has served some of the largest investment companies in the US and globally to streamline transaction processes, assure confidence in complex deal underwriting, and significantly improve on-going operations and reporting.

Services Include:

Joint Venture Waterfalls

• Distribution computations for LP, GP and/or manager
• Dynamic modeling for financial reporting purposes on a hypothetical liquidation basis
• Review of draft JV agreement financial terms to ensure clarity and precision
• Incorporation of various concepts such as catch-ups, promote crystallization, reverse waterfall, etc.
• Programmatic JV models including multiple deals with claw-backs
• Entity-level valuation in complex ownership structures

Private Equity Fund Models

• European- and American-style funds
• Hybrid-style funds with claw-backs
• Closed- and open-end funds
• Fund return projections for capital raising purposes, including gross and net returns accounting for JV level promotes, asset management fees, fund expenses, fund-level carried interest, federal and state/local taxes, and withholding taxes for foreign investors (in collaboration with FTI Consulting’s or client’s tax team)
• Preparation or validation of the performance track record of the fund manager with a report summarizing procedures performed and the results of those procedures

Fund Administration Support

• Computation of complex incentive fee structure models that cannot be automated in Enterprise Resource Planning systems (Yardi, MRI, etc.) for re-integration back to the systems
• Investment performance reporting in compliance with applicable reporting standards (e.g., NCREIF, GIPS)

Transaction Models

• Mergers, portfolio acquisitions/recapitalizations, IPOs, carveouts/spin-offs
• Robust/efficient modeling with advanced data management technology
• Waterfall model integration with property level projection models (Argus and Excel)
• Thorough analysis of ownership structure

Operating and Development Platform Valuation

• Analysis for internalization/externalization of managers of public REITs and private companies
• Platform level EBITDA projections based on underlying property financials and expense carveout/synergy analyses
• Robust database supporting comparable multiples/ratios, beta, WACC, DLOM/DLOC
• Incorporation of executive compensation recommendations (in collaboration with FTI Consulting’s executive compensation team)

Underwriting Model Development and Review

• Build-to-suit underwriting model for acquisition of development, value-add, and stabilized real estate projects
• Review of client underwriting models for computational accuracy
• Review of investor presentations vis-a-vis underwriting models to ensure accuracy
• Preparation of report summarizing the results of the procedures performed on the underwriting model

A bumpy capital markets recovery has revealed unprecedented challenges as well as new opportunities for owners and developers seeking capital for growth, investors looking to deploy capital, and operating businesses trying to enhance or unlock enterprise value. FTI Consulting — through its investment banking subsidiary, FTI Capital Advisors, and its real estate brokerage subsidiary, FTI Consulting Realty — helps public and private sponsors, operators, investors and operating businesses that are strategically dependent on real estate. Our real estate experts assist with debt and equity financings; asset- and portfolio-level transactions; business combinations (including joint ventures and M&A); and strategic moves or decisions that may affect enterprise value.

Services Include:

Debt/Equity Placement, Joint Ventures and Investment Programs

Investment Sales

Merger & Acquisition Advisory

The real estate industry is experiencing significant growth, disruption and change: a trend that is likely to continue for years to come. This industry-wide change is forcing real estate investors and owners to reassess their operations with an eye toward increasing efficiency and effectiveness. Once accustomed to managing through manual processes, real estate companies are implementing technologies to improve automation and workflows. At the same time, they are assessing their approach to improve data management and technology, processes, and the structure of their organization.

Services Include:

Technology and Operating Model Assessment, Design and Implementation Services

• Operating model scalability assessments
• Technology selection, assessments and implementation
• Service provider selection and assessments
• Organization design
• Process and policies & procedures design
• Project management
• Organization change management

Analytics and Data Management Services

• Data strategy and design
• Data governance
• Data analytics and dashboard design
• Data collection and processing automation

Our experts can help you determine the key drivers for creating maximum project value. We help manage relationships among investors, developers and public sector stakeholders to create and execute complex development projects. In addition, we help clients access capital and we articulate the economic and business benefits of projects to satisfy investor and regulatory requirements.

Services Include:

Strategy

• Highest and best use, land use, economic and community development, public benefits and capitalization, and feasibility

Project Program and Public Policy Review

• Market and financial feasibility, investment analyses and transaction support

Due Diligence and Underwriting

• Valuation and appraisal, economic and fiscal impact analyses, public/private partnership structures, project finance planning, technical reports and implementation

RFP Responses

• Construction management oversight, outsourced accounting and tax analyses, and regulatory compliance

At FTI Consulting, we believe that designing effective and appropriate executive and board compensation programs cannot be addressed in a transactional manner, but instead requires a proactive approach that includes reviewing and understanding an organization’s compensation philosophy, interviewing and developing relationships with the organization’s board and management team, and fostering a year‐round relationship with clients.

Our expertise covers complex and routine compensation and governance matters. We take pride in our relationship-based approach, which enables our experienced professionals to leverage our extensive knowledge of the dynamics and key factors directly impacting our clients to create compensation programs that support organizational goals. This approach is only possible by engaging in relationship-driven consulting that focuses on the underlying culture and strategy at each company.

FTI Consulting works closely with public and private companies to create customized and balanced compensation programs designed to reward and motivate management for long-term performance. We also provide expert advice on the development and implementation of disciplined and compliant corporate governance policies.

Services Include:

Compensation Plan Design and Implementation

• Review and risk assessment of executive and board compensation
• Incentive compensation program design, including performance metric selection and goal setting, plan leverage and calibration, pay mix between fixed and at-risk components, and accounting and tax implications
• Negotiation and review of employment agreements
• Equity incentive plan review and upsizing
• Carried interest/promote structure design and implementation
• Design of non-carry real/synthetic equity incentive arrangements

Corporate Governance Advisory

• Policy review and risk assessment
• Board and executive performance evaluations
• Succession planning
• Shareholder engagement and outreach

Litigation Support Services

Corporate Transaction Services

• Transaction advisory, including IPOs, corporate spin-offs, management internalizations, and merger integration
• Computation of severance and 280G excise tax gross-up payments
• Negotiation of non-compete and retention agreements