The next step is the vetting stage, which is triggered when we encounter investment opportunities within our predetermined list of target markets that have a “story” and also fit our general criteria for vintage and unit-count. At this point, we solicit the specific details from the sellers, such as pricing guidance, rent rolls, financial statements, a list of seller’s capital expenditures on the property, outstanding major maintenance projects, recent value-add achievements both onsite and within the competitive set, potential revenue runway, and the like. Properties that align with our platform on these points are then subjected to a full underwriting, involving an examination into the property’s operational history, the detailed demographic data of the location, crime statistics, school system rankings, and submarket performance projections, all of which is used for the construction of a defendable pro forma. CEAI analyzes the extent to which the underwriting aligns with our criteria on entry capitalization rate, discount to replacement costs, rent-to-income ratio, stabilized yield on cost, average annual cashflow, internal rate of return, equity multiple, and substantiated disposition pricing.

Upon completion of the vetting process, if all internal approvals have been met and we have confirmed our general assumptions on capital stack formation, then we will proceed with formally submitting a bid to acquire the asset.  Once awarded a deal by seller, this triggers the third and final verification stage of our diligence protocols, whereby CEAI deploys a diligence crew to the property, comprised of team members from CEAI, CEC, and Nexus 5, while we simultaneously begin ordering and reviewing all third-party reports (e.g. appraisal, environmental reports, physical condition needs assessment, etc.). This deployment onsite typically lasts between three to five days.  During this time, we conduct an in-depth lease-file audit, a full walk through of all units, and a thorough inspection of the exteriors and all major mechanical systems. Utilizing the latest software, we are able to track progress in real time, which we then synthesize and compile into a full Due Diligence Report for review by our capital partners and internal investment committee for final approval to move ahead with closing.

As is clear, CEAI and iiM both adhere to detailed due diligence protocols that advise investment decision-making. Similarities such as each company’s focus within predetermined parameters – agriculture, animal health and human health start-ups for iiM, and Class B value-add opportunities in robust growth markets for CEAI – stand out as a shared inclination to stick to our respective areas of expertise. Where variances in approach do exist, on the whole they reflect the different nature of each company’s investment focus. For example, whereas CEAI naturally focuses more on locational and market factors, iiM places far more emphasis on the personalities, track records and the capabilities of the leadership teams of the start-up companies they analyze. Ultimately, our commitment to detailed-oriented analysis, conservative risk mitigation strategies, and vigorous due diligence procedures will continue to sustain strong interest among our existing and growing investor base, while ensuring both CEAI and iiM continue to invest wisely, generate profits, and in turn enjoy strong and growing portfolios well into the future.