Real Estate Asset
ICREA offers several options to build and access real assets, like infrastructure, enabling our clients to build a customised portfolio that meets their unique needs and returns while minimizing speculation. Our range of services includes: built to suit solutions, long term leases, land advisory services, lease advisory, joint ventures, and strategic alliances.
Built to Suit Solutions (CAPEX Light)
As per the specifications of the Operator, our asset solutions are custom built by a Real Estate Developer or a Financial Investor, and subsequently leased to the Operator on a long term lease up to 25 years.
This is most popular for long gestation projects wherein the Operator seeks to work on an asset light model in the following sectors:
This model allows the Operator to access customized assets without blocking long term equity and debt funding for this project. On the other hand, the Real Estate Developer or Financial Investor will earn steady long term returns along with the prospect of capital appreciation, without the maintenance expenses of the asset, whose responsibility lies with the Operator.
Identifying Strategic Land Plots
There are a number of factors to be considered while determining a strategic geographical location for healthcare and education sites. Therefore, identifying a plot that best meets the requirements of such a site is a challenging undertaking. ICREA can idenitfy suitable locations for the operating companies depending on their business needs, given our wide network of existing relationships with Local families, landlords and developers across a number of countries.
Long Term Leases
ICREA assists with the tying up of a long term lease for specialized commercial real estate assets (ready assets and assets in browm field stage) for both Asset Onwers and Developers in the following sectors:
- Industrial logistics
Depending on the requirements of the clients, a long term lease ranges from 15 to 25 years. The Operators benefit from these leases by attaining access to ready to operate assets and the Asset Owners benefit from the generation of lease income from the assets.
Asset based Joint Venture
An asset based joint venture is structured amongst a Capital Provider, Developer, Landowner and an Asset Manager depending on the stakeholders involved and the needs of the project. This allows all the parties to maximize their respective returns in a real estate transaction, as compared to traditional investment strategies. ICREA has the necessary expertise and core capabilities, along with a track record in the identification of the right partners and successful closures.
Sale & Leaseback
Due to lack of suitable real estate, specialized operating businesses in sectors like healthcare, education, logistics, ecommerce, hypermarkets and large transnational corporates are often left with no choice but to build their own assets. These large investments lead to becoming asset heavy companies, with a substantial portion of their value locked away in real estate.
An alternative real estate financing structure to to ensure that large assets don't tie you down and allows you to unlock equity capital for investment in the growth and expansion of your core business is Sale and Leaseback. A leaseback is an arrangement through which the company that sells the asset can lease it back from the purchaser, the seller of the asset becomes the lessee and the purchaser becomes the lessor. ICREA has the necessary expertise and core capabilities, along with a track record in the identification of the right institutional investors of internatiornal grade from its existing network and successful closures.
Management Operator Tie-Ups
Investors, developers, owners and business houses have either already invested in focused sectors education, healthcare or hospitality or they intend to invest as a means of diversification. Investors that are keen to get involved in these sectors must realize that with growing competition and stringent government policies, tying up with a renowned operator is a significant advantage and differentiation point.
Due to lack of track record and competence in these sectors as well as large investments in developing these asset heavy businesses, the risk of the non-profitable projects is quite high. Good operators bring with them their brand, operational efficiency, skills and knowledge to run the business profitably, thus reducing the risk considerably. Additionally, if you are already experienced in these sectors, bringing in the right operator can enhance profitability and valuation along with ease in exit strategy.
The major challenge is identifying and tying up with the right operator and that is where ICREA comes in, with our structured process driven, systematic approach clubbed with experience and knowledge of these sectors. We can help identify the right management operators from within our extensive network of management operators ranging from leading brands to mid level brands across several geographies. A typical management contract has excess of 100 major negotiation points which have immediate and lasting effects on the business and property, affecting the cash flow to the owner and the performance and manageability of the operator.
ICREA has experience and has successfully executed such assignments. We understand management company branding, management contract structures, major commercial terms and other owner/operator obligations. Our services include:
- Operator search and selection
- MOU/LOI review and negotiation
- Management agreement review and negotiation
Transaction Advisory: Asset Buy Side
Transaction Advisory: Asset Sell Side
We advise on direct real estate transactions assisting our clients (operators ,corporate owners, funds, developers, landlord ) on all corporate acquisition or disposal of real estate assets including pre-leased (single asset, healthcare, education, commercial or industrial, any other type of asset), acquisition or disposal of real estate special purpose vehicles, merger and acquisition among real estate players (funds, developers, landlords and corporate).
In terms of the buy side, for a potential buyer it is critical that our team performs enough analysis to ensure the acquisition delivers the right fit for the right price. For the sell side as a potential seller, performing the analysis and due diligence reduces the risk of having surprises at last minutes and enhances the possibility of successful closure.
ICREA has a team of experienced specialists with relevant expertise and exposure, helping clients manage and execute transactions during the full life cycle of the transaction. We ensure this by running our structured sell side/buy side process effectively by our specialists. ICREA has successfully executed several such transactions.
ICREA's focus sectors in the Middle East, African, and Indian subcontinent regions stays major for both people in general and private players. These regions are one of the world's most noteworthy opportunities for Education, Healthcare, Industrials and Logistics. We give key guidance on whether for the PropCo (Real Estate) or OpCo (Business Operations) models would be perfect for you to enter or expand your presence in these markets. Regardless of whether you are leasing, renting, buying, selling, investing or looking for land our accomplished experts will work cooperatively with you. We will lay out market entries and enhance land yields that will provide the most ideal result for your extraordinary vision.
Asset Light Models
The following sectors are business heavy on infrastructure investments:
In such projects, operators seek to work on an asset light model without blocking equity funds nor raising long term debt for the project. The real estate developer or financial investor in turn gets steady long term attractive returns along with prospect of capital appreciation with no headache of day to day maintenance of the asset, the responsibility whereof lies solely with operator of the asset. Asset light model solution can be structured at both stages, the first at the green filed stage by structuring built to suit as per the specifications required. At the second stage if the operator has already invetsed in the asset then by structuring sale and lease back transaction. ICREA has successfully closed such transactions for the operating companies aligning to needs of operating companies through its wide network of existing relationships and rapport with institutional investors network, local families, landlords and developers along with the expertise, skills and knowledge across sectors and countries ICREA operates in.
Lease ready buildings
Changing business sector and monetary conditions combined with dynamic accounting practices have brought about organizations undertaking a reappraisal of leasehold liabilities and investors looking to limit risk while amplifying returns. Our teams effectively look to increase the probability of achieving such a scenario through essential financial and real estate due diligence and exhaustive examination of choices and arrangement on new rent terms.
Brown field projects
The term brownfield project is used in many industries but for ICREA it especially means the sharing of risk for investors and the alleviation of heavy investments to start a project from the ground-up. With our immense network, we work with clients to maximize shareholder return by finding and delivering on suitable partners.
Land Monetisation Advisory
Monetization is the process of converting assets into economic value when ooking for options to generate greater revenue. Undeveloped land has zero revenue when left as is. We at ICREA assist our corporate, businesses and families who are land rich and hold significant land banks by advising and consulting them to convert them from zero revenue to revenue generating assets. There can be great financial opportunity in the monetization of land banks.
The financial upside for land development is potentially great, as it may be an opportunity to unlock value from a zero-revenue asset. There has also been the development recently of more creative and profitable partnerships. There are various possibilities and solutions through which we can structure around land, including joint ventures, developments, built to suit, developing specific hubs etc,. It primarily depends the on location of the land. ICREA has highly experienced top management, board and advisors to advise and consult the landowners on converting their land into revenue generating assets and monetise it.
Asset valuation involves estimating the cost of an asset using different methodologies to arrive at its fair value at which the client can sell or acquire the asset. ICREA with its extensive background in real estate is equipped to perfom the valuation based on the sector, location and type of asset. This exercise is usually carried out for fund raising equity or debt or a potential Merger and Acquisition transactions and may involve both tangible or intangible factors. ICREA is ideally suited to do such a valuation for smooth transaction execution.
Land Parcel Monetisation
The financial upside for land development is potentially great, as it may be an opportunity to unlock value from a zero-revenue asset. There has also been the development recently of more creative and profitable partnerships. There are various possibilities and solutions through which we can structure around land, including joint ventures, developments, built to suit, developing specific hubs etc. It primarily depends the on location of the land. ICREA has highly experienced top management, board and advisors to advise and consult the landowners on converting their land into revenue generating assets and monetise it.
Any changes in circumstances usually increases the business’ costs or reduces its revenue, such as the current pandemic has created difficult environment for most of businesses. As most of the contracts including long lease contracts by operating companies were signed earlier on, now with considerably changed circumstances, there is a demand for renegotiation to sustain survival.
We advise our clients to identify areas of potential cost savings and creative structuring on commercials realignment, while keeping the risk and reward in mind for both parties. The outcome that we focus on is to deliver savings through:
- Negotiation re-scope
- Re-negotiation of commercial terms
- Termination of the contract
Our approach for renegotiation is includes a performing a deep diagnostic to identify gaps and also to creatively structure realignment terms to accommodate business needs, survival and sustenance in changing times.
Acquisition & Divestments of Operating Business/ Real Estate Assets
Our real estate advisors are expertly qualified and exceptionally experienced in dealing with this specialized cycle and can give both vital counsel and backing all through the negotiation and execution cycle.