Riskonet plays a key role in a global client’s acquisition of 24 assets in Poland, the UK and Germany
January 14, 2022
When it comes to the providers of risk-assessment and management services, sometimes it takes a really tall order to “separate the men from the boys”. Like in late 2021, for example, when, in a matter of weeks, Riskonet quickly mobilised its international network and helped a leading global investment player acquire 24 European assets.
Huge portfolio
Before year’s end in 2021, and just over a month after being asked by CBRE Investment Management, Riskonet completed Pre Acquisition Risk Assessments (PARA) for a portfolio of 24 assets in Poland, the UK and Germany. These 24 assets are the European contingent of a huge 57-asset, 2.64-million-square-metre portfolio of state-of-the-art logistics properties in the US and Europe that CBRE Investment Management is acquiring from Hillwood Investment Properties. The PARAs are an integral component of a broader due-diligence process carried out for the acquisition of real estate.
Under pressure
Riskonet has been carrying out PARAs for CBRE Investment Management for some 20 years, begins Riskonet CEO Ron de Bruijn. But this request was different, by virtue of its sheer size and the time pressure. The deal had to be finalised for CBRE Investment Management before the end of the year. “We received the request mid-November 2021. Within a week we’d put the necessary teams together, set up a planning schedule and started visiting the 24 assets. We were able to deliver the first red-flag reports just two days later and after three more weeks we had delivered all full PARA reports, well within the required timescale.”
Intense process
By way of explanation, Ron describes how, in a PARA, Riskonet looks at the risks associated with an asset in a multidimensional way. “We focus on insurability, compliance with legislation and the adequacy of its protection facilities. “Any deviations that we find are highlighted as red flags in the report.” To put the achievement into perspective he explains that the compilation of a PARA typically involves a few days reviewing data, a day to visit the site, and then the findings are processed into the actual report. “To do these 24 PARAs in such a short timeframe was an intense process that involved mobilising Riskonet’s entire teams in Poland the UK and Germany.”
“Our international network of partners really benefits our clients. If a client wishes to acquire assets in different countries we can respond quickly and effectively and we have the necessary local knowledge.”
Ron de Bruijn, Managing Partner
More remarkable
The activities were carried out by Riskonet’s own people in the Netherlands and Poland and with the aid of the company’s partner Certus in the UK and in Germany. The achievement was all the more remarkable, Ron points out, when you consider that during the same timeframe, in conjunction with its partners Oden & Oden and Firisk, Riskonet also carried out similar assessments of a smaller portfolio of four CBRE assets in Sweden, Denmark, Belgium and Luxembourg. “Our international network of partners really benefits our clients. If a client wishes to acquire assets in different countries we can respond quickly and effectively and we have the necessary local knowledge.”
Double-edged sword
Riskonet was quickly able to inform CBRE Investment Management that, with a few exceptions, the 24 assets represented a qualitatively good portfolio. The exceptions were a small number of assets that were not quite fit for their designated purpose and these were red-flagged. For the client, a red-flag report is often a double-edged sword because it can put pressure on its acquisition team, cautions Ron. “If an asset falls short in any way, the client certainly wants to know about it, but that doesn’t necessarily mean he’ll be pleased to hear it. At best, red flags probably mean additional work for the client and at worst they could even mean having to block the acquisition.”
No nasty surprises
But for its clients, the added value of Riskonet speaks for itself, while the PARAs the company provides can actually pay for themselves. PARAs give well-founded insights into an asset’s legislative and regulative compliance with international standards, such as NFPA. Moreover, PARAs can save a lot of money in the long-term by giving early warning of potential insurance issues and possible areas of non-compliance can serve as useful leverage during negotiations. The bottom line for clients is an increase in risk awareness prior to an acquisition and a significant reduction in the likelihood of encountering nasty surprises further down the line.
Big deal
Ron is very proud of Riskonet’s successful completion of the PARAs for the 24 assets. “Despite this being a good quality portfolio, we were still able to identify certain challenges and issues that some assets posed and openly discuss these with the client’s acquisition team. The team was then able to take our findings and recommendations into consideration in their acquisition of this huge portfolio. Logistics real estate is a very attractive investment at the moment, so the on-time acquisition of the assets in this portfolio was a really big deal for CBRE Investment Management. Once again, it all goes to demonstrate the strength, flexibility and deployability of the Riskonet network.”
