Cadence prides itself on stress testing every assumption and running complex models for every capital raise.
Recognizing early a need for a data-driven system to evaluate opportunities across geographies and asset classes, Cadence set out to create a proprietary scoring system. Wanting a best-in-class system, we partnered with 6 University of Michigan MBA students pursuant to the Ross School of Business Multidisciplinary Action Project course.
Based on consultations with our capital relationships, we identified 23 factors integral to a real estate project’s success. By evaluating and weighing these factors, we handicap a project’s likelihood of success and identify potential weak spots to be discussed at the forefront of a raise. While not a substitute for a potential investor’s own underwriting and diligence, we believe our capital resources appreciate a process and filter before a deal reaches their inbox.
If a deal has passed our scoring system test, our process continues as follows:
We form a Tier One and Tier Two list of potential capital providers, which we vet with the client. Though we have an extensive database, we never send blasts - we use information gleaned from hours of conversations as to what capital wants (risk, ticket size, asset class, and geography). Capital appreciates this bespoke touch, resulting in more attention to our offerings. Finally, we “huddle” with the Sponsor before kick-off to practice the “pitch.”
CONFIDENTIALITY & COMMUNICATION
Capital providers receive a CA filtering access to the Citrix ShareFile deal room where extensive project data is housed. We value data security and are constantly refining how we selectively share private financial information.
We organize a regular update call to apprise the Sponsor of the state of the raise, and share an up-to-date activity report to discuss feedback from capital.
Cadence and the Sponsor select the best possible fit for the project both economically and culturally at the end of the process and facilitate JV agreements, loan docs, PSA, etc.
The Sponsor and Cadence will enter into an exclusive agreement. Our agreement ensures we can create a competitive environment and increase your negotiating power when reviewing term sheets. When sponsors choose to pursue capital on their own, it can dilute their negotiating power and put them at a major disadvantage from the get-go.
We showcase each opportunity through Cadence’s “Audible Investment Summary,” a concise offering memorandum including only a deal’s essentials. Developed and tested over time, it is our thesis (and investor feedback has confirmed) a short, dense OM is more respectful of investor time and therefore will more often move to the top of the pile.