Due Diligence is the analysis of the facts and circumstances associated with an investment, intended to provide an investor with a full disclosure of the facts and risks in order to arrive at an investment decision.
The first three layers of due diligence are performed by the sponsor, the lender and legal counsel, while a fourth layer is performed by our brokerage.
After an offering is initiated by the sponsor and approved by the lender and legal counsel, it is given to our brokerage due diligence department. Our full-time analysts review each offering, with the following five key areas as their focus:
Examination of the Investment Sponsor
Analysis of the underlying investments and holdings
Analysis of the Market
Evaluation of Program Structure
Evaluation of 1031 Tax Compliance
External unaffiliated due diligence firms also provide valuable insight to investments. Our brokerage due diligence department reject a signifcant percentage of the offerings presented. The reasons for rejection are varied and can relate to the investment itself, the sponsor, the financing, or the market. It is important to note that this final level of due diligence is after the sponsor, the lender and the legal counsel have all approved the offering, meaning that those offerings declined by us may be available to investors through other brokers.
In this context, it is especially important that investors feel comfortable with the standards of their broker and that their approaches to investment align.