Commercial

 COMMERCIAL REAL ESTATE

The term commercial property (also called commercial real estate, investment or income property) refers to buildings or land intended to generate a profit, either from capital gain or rental income.1 Commercial property includes office buildings, medical centers, hotels, malls, retail stores, farm land, multifamily housing buildings, warehouses, and garages. In many states, residential property containing more than a certain number of units qualifies as commercial property for borrowing and tax purposes.

Commercial real estate is commonly divided into Five categories:

1 /- Office Buildings – This category includes single-tenant properties, small professional office buildings, downtown skyscrapers, and everything in between.
2/- Retail/Restaurant – This category includes pad sites on highway frontages, single tenant retail buildings, small neighborhood shopping centers, larger centers with grocery store anchor tenants, "power centers" with large anchor stores such as Best Buy, PetSmart, OfficeMax, and so on even regional and outlet malls.
3/- Multifamily – This category includes apartment complexes or high-rise apartment buildings. Generally, anything larger than a fourplex is considered commercial real estate.
4/- Land – This category includes investment properties on undeveloped, raw, rural land in the path of future development. Or, infill land with an urban area, pad sites, and more.
5/- Miscellaneous – This catch-all category would include any other nonresidential properties such as hotel, hospitality, medical, and self-storage developments, as well as many more.

Commercial property transaction process (Deal Management)

Typically, a broker will identify a property that fits a set of criteria set out by acquisitions, capital investment, or private equity firm. The firm will perform an informal assessment of the property location and potential profitability, and if they are interested, they will signal their intent to move forward with a letter of intent (LOI).

An investment committee with senior acquisitions executives reviews all pending deals and advises whether to move forward with a purchase and sale agreement, or PSA (Pricing Strategy Adviser )
 PSA, and a deposit. A PSA is an exclusive agreement between the seller and a single interested buyer. No other LOIs or PSA may exist for one property at a time.

Once a PSA is executed, the acquisitions team usually has 30 days to perform due diligence, unless an extension is granted. During this 30-day period, the acquisitions team investigates the property thoroughly in an attempt to uncover any undesirable characteristics, damage, or other circumstances that could affect the profitability or final selling price of the property.

The acquisitions team may want to investigate the rent roll, existing vendor contracts, city permits, insurance policies, etc.. The acquisitions firm may hire a third party to conduct an appraisal, environmental reports, traffic counts, and more. The ultimate goal is to gather as much information as possible to make an informed investment decision.

Once due diligence is complete, the acquisitions team must decide whether to move forward with the purchase to closing. Closing is a window of 10-15 days during which the acquisitions firm owes an additional deposit, and they must finalize financing.

When a deal closes, post-closing processes may begin, including notifying tenants of an ownership change, transferring vendor relationships, and handing over relevant information to the asset management team.[citation needed]