Financial advisory in Real Estate
Transaction Support Team
Our Real Estate Transaction Support team carries out due diligence in reviewing target companies trading performance, cash flows, debt structures, and major contracts. As the Russian market evolves, sale and purchase agreements are becoming more sophisticated, with increasing use of “completion accounts” mechanisms. We can assist with SPA drafting and review completion accounts to help you achieve maximum value from the transaction
Problem: What sources of financial information prepared by the Russian real estate companies are appropriate to look when considering an investment?
Response: Statutory accounts prepared under the Russian Accounting Principles often do not fairly reflect financial performance or the financial position of the Target due to unrecorded or incorrectly recorded transactions (such as transactions with related parties, tax optimization schemes, service, management, facilitation and other similar transactions)
Solution: Deloitte CIS can prepare an adjusted pro forma of financial statements reflecting fair (“IFRS-like”) financial performance and financial position of the Target
Problem: Which unrecorded liabilities may exist in Russian companies operating in the real estate sector?
Response: Russian real estate companies generally have significant contingent and other unrecorded liabilities (e.g. commitments to construct and infrastructure items for local authorities free of charge, “golden parachutes”, committed CAPEX, long-term lease liabilities generally unrecorded in RAS, contracts retention, litigations, etc.)
Solution: Deloitte CIS can identify all potential unrecorded liabilities and estimate the actual amount of the Target’s net debt
Problem: How can financial risks be covered in the Sale Purchase Agreement?
Response: This can be achieved via an appropriate pricing mechanism, sufficient warranties and indemnities, explicit description of completion statement and completion price adjustments
Solution: Deloitte CIS provides full SPA support from a financial point of view. Together with you and your legal advisors we will work out the most appropriate financial terms and formulas, participate in negotiations with the seller and check of completion statement
Real Estate Valuation
Our Real Estate Valuation team covers a full spectrum of real estate valuation services, ranging from evaluating large and diverse portfolios to performing single property analyses. In addition, our team is proficient in the preparation of feasibility studies and investment memorandums, highest and best use analysis, financial modeling, location analysis and market research
Key advantages that differentiate us from other services providers are:
- An in-depth understanding of the market and unique professional background
- A comprehensive set of financial modeling tools for development projects and operating properties
- Long-standing relations with major financial institutions that help ensure effective communication in the fund raising process