Transaction Advisory Services

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Transaction Real Estate

Ernst & Young Real Estate Services Inc

"What strategies and tools are available to boost the value of our real estate portfolio in support of our business objectives?"

Leveraging your real estate assets effectively requires a careful understanding of their attributes and how they are aligned with your business’s overall goals and strategy. What’s more, the best real estate strategies are continually monitored and often adjusted to reflect the fast-evolving world in which they operate.

Our Transaction Real Estate team brings a collaborative approach to understanding your real estate assets and identifying potential opportunities and challenges. By considering current and potential future values, financing or other capital allocated to real estate and other related information, we can develop an action plan to align real estate with business objectives.

From market conditions and trends to stakeholder expectations, from operational flexibility to availability of capital, we bring a holistic analysis of the factors that shape real estate strategy, to help define the approach that supports your company’s growth goals.

Our dynamic, collaborative team provides you with integrated, objective advice that helps you extract value from your real estate portfolio:

  • Strategic analysis

    What are the issues?

    • The outlook for real estate assets is changing
    • Extract value from existing asset/portfolio
    • Repositioning or monetizing assets is required
    • Succession planning is required or underway
    • Significant capital is tied up and/or a large additional commitment of funds to real estate is pending
    • Overall asset or portfolio performance is below expectations

    How we can help

    We can help you fully understand the attributes of your real estate, manage risks, assess opportunities to enhance and unlock value and outline the critical steps to help you get there. Our services include:

    • Asset or portfolio assessment, options analysis and cash flow modelling
    • Market analysis
    • Strategy development, including assessment of opportunities to realize value and achieve targets
    • Benchmarking
    • Lease vs. own analysis, including sale-leaseback analysis
    • Tax analysis and tax-effective disposition or separation strategies
    • Financial statement implications for financial reporting purposes

    The potential benefits

    • Better knowledge and understanding of your real estate assets, the market and the competitive landscape
    • Improved basis for decision-making, including understanding the financial statement implications
    • Value optimization
  • Financing services

    What are the issues?

    • Existing financing is maturing
    • Increasing leverage may enhance returns
    • Repatriating capital may allow for redeployment
    • New projects require financing

    How we can help

    Our thorough understanding of real estate, financing structures and funding sources allows us to properly position the assets in the market and present the opportunity to those investors and/or lenders (both debt and equity) most likely to participate. Our services include:

    The potential benefits

    • Asset and portfolio valuations
    • Cash flow modelling
    • Analysis of available debt and equity financing options
    • Debt and equity sourcing and arranging
    • Permanent, recapitalization and construction/project financing
    • Access to funding sources in Canada, the United States and around the world through the EY global real estate network
    • Finding appropriate joint venture partners
    • Enhanced returns
    • Ability to grow the business
    • Facilitate desired investment or recapitalization with appropriate sources of funds
    • Improve cost of capital and/or financial flexibility
  • Acquisitions, divestitures and partnerships

    What are the issues?

    • A revised asset or business strategy is under consideration
    • A market opportunity has presented itself
    • Non-core assets have been identified and are to be sold
    • Real estate as a component of a larger corporate transaction
    • Due diligence is required in support of the asset or portfolio purchase
    • Succession planning and/or disputes requiring a sale of real estate

    How we can help

    Our experience in assessing real estate assets and market trends allows us to thoroughly evaluate each situation in the context of your business objectives and, in the case of dispositions, position the asset in the market to enhance proceeds. Our services include:

    • Market analysis and assessment
    • Property evaluations
    • Assessing complex assets and portfolios, including in-depth buy-side due diligence
    • Developing “go-to market” strategy and investment memorandums
    • Designing and administering the RFP process, including evaluating submissions
    • Preparating data rooms and managing potential buyer’s due diligence requests
    • Deal structuring and tax planning
    • Licensed real estate broker services
    • Transaction closing oversight

    The potential benefits

    Integrated services from asset assessment and marketing strategy development to tax structuring and transaction completion for both asset purchases and sales.

  • Valuation

    What are the issues?

    There is a requirement for an independent valuation of real property for:

    • Transaction readiness
    • Capital raising
    • Shareholder buyouts
    • Financial reporting

    How we can help

    Our team values and reviews appraisals for billions of dollars of properties each year, giving us a thorough understanding of each asset class and geography. Our services include:

    • Appraisals and appraisal review
    • Lease valuation
    • Cash flow modelling
    • Fairness opinions
    • Purchase price allocations
    • IFRS advisory
    • Impairment testing and other issues related to financial reporting requirements
    • Litigation support

    The potential benefits

    Current independent and objective valuations supported by up-to-date market data.

  • Due diligence

    What are the issues?

    • An asset or portfolio is under contract for potential acquisition or divestiture
    • Independent review of in-place or future Net Operating Income is required
    • Lease analysis is required to ensure consistency with cash flows

    How we can help

    Our due diligence services are focused on reviewing and understanding historical and projected operating metrics for assets and portfolios. Our services include:

    • Property and portfolio revenue analysis
    • Operating expense analysis
    • Review or development of financial projections
    • Lease analysis and review
    • Lease audits
    • Tenant and property profile analysis
    • Review of projected capital expenditures for maintenance and development
    • Review of closing statements and adjustments
    • Oversight of sub-consultants (environmental and structural engineers)

    The potential benefits

    • Ability to act quickly when internal resources are limited
    • Independent confirmation to ensure reasonability of underwriting and completeness of all due diligence procedures
    • Objective and independent assessments
  • Dispute resolution

    What are the issues?

    Disagreements between stakeholders have arisen and are threatening to impair or erode the value of the property or portfolio. Commonly disputed issues include:

    • Project cost and/or funding allocations between stakeholders
    • Valuation disputes
    • Buy/sell transactions
    • Separation of assets

    How we can help

    We have experience dealing with disputes between stakeholders and have acted in both informal and formal capacities to assist one or multiple parties as they work to resolve differences. Our services include:

    • Asset or portfolio valuation
    • Development of tax-effective strategies for the separation of interests
    • Development of budgets and oversight of disbursements in accordance with agreed-upon budgets
    • Development of cash flow models
    • Acting as an informal mediator
    • Litigation support mandates
    • Forensic accounting services
    • Acting as a court-appointed administrator or construction lien trustee

    The potential benefits

    Development and implementation of strategies to reduce cost and time.

  • Public sector advisory

    What are the issues?

    • Long-term capital and operating expense planning for government-owned assets
    • Opportunities to unlock value through densification, sever-and-sell and/or lease out to third parties
    • Infrastructure project assessments
    • Alternative funding options when funding is not available

    How we can help

    Our professionals have many years of experience working closely with all levels of government in a wide range of engagements. Our services include:

    • Strategic and financial options analysis
    • Portfolio planning
    • Market assessments
    • Assessing assets including development opportunities
    • Designing and administering RFQ/RFP processes
    • Developing evaluation criteria and evaluating the submissions
    • Preparing projections and related business cases
    • Advising on appropriate financing structure and sources
    • Establishing parameters for financial models to be submitted by bidders
    • Securing financing
    • Preparing comprehensive reports in support of all reporting requirements
    • Advising on alternative service delivery models
    • Evaluating public-private partnership (PPP) scenarios

    The potential benefits

    A relationship with an advisor who understands the requirements of the sponsor, is sensitive to issues affecting other stakeholders, and who is able to objectively meet the needs of the sponsor.

  • Operations enhancement

    What are the issues?

    • Current processes are not sufficiently flexible to support future growth
    • High operating costs
    • Changing industry practices with new technologies and standards
    • Significant new regulations
    • Pressure from analysts or stakeholders to achieve certain ratings

    How we can help

    Our experience allows us to quickly understand the existing cost structure and/or property management terms as a basis for identifying opportunities to improve. Our services include:

    The potential benefits

    • Operating cost benchmarking
    • Assessing existing processes and outlining potential opportunities for improvement
    • Assessing capital improvement and return of capital plans
    • Developing and implementing asset and portfolio management plans
    • Reviewing leases and property management contracts for financial and non-financial terms
      • Efficient improvement strategies and operating cost structures
      • Ability to balance cash flow and measure return on investment
      • Position company to grow without disrupting existing processes

Contact us

Ray Drost    Ray Drost 
Leader,
Transaction Real Estate
416 943 4455

Contact a member of our team.
 

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