Some Seriously smart Due Diligence

Posted on 10/22/10 in General, No Comments

I heard a very funny story yesterday and thought I would share.

An investor is doing Due diligence on a small building in the main street, the major tenant being one of the 5 main banks lets say BNZ.

So the investor starts to do his due Diligence and finds out the bank have only one year remaining on a 9 year lease, this could be a problem.

What happens if the BNZ move out of the building?

This will make the entire deal a different proposition.

So The investor calls the asset management section of the BNZ and inquires if they are planning on renewing their lease or if they are planning to move to the mall like everyone else?

The BNZ replied that they could not make this information public…..Hmmmm frustrating.

And this could be the end of the story if this investor wasn’t rather smart or logical depending on which way you look at it.

The investor then applied for finance to purchase the building, and as he was an investor with independent wealth and very healthy track record this should not have been an issue to get the funding.

But the smart thing he did was apply for the funding “From the BNZ!”

And they turned down his application all but stating that it was because of the unreliable income expectation, in other words they are not going to renew the lease.

This just tickled me because it was a very smart way to figure out the banks intention.

PS don’t forget this weeks webinar with Dolf de Roos Register HERE

Post a Comment

Your email is never published or shared. Required fields are marked *