Across debt and equity groups, enterprise and lean investment firms, and all markets, deal management software has proven its mettle in the real estate world as a driving force behind top-line revenue growth. With real-time pipeline visibility and standardized workflows, firms can make faster, more efficient data-driven decisions. One such firm is Avanath Capital Management, an investment manager focused on acquiring and managing affordable communities.
We sat down with Connor Mortland, Director of Acquisitions, to learn more about how Avanath has grown by streamlining workflows, standardizing reporting, and expediting decisions. According to Connor, during Avanath’s first year spent managing deals in Dealpath, the firm doubled deals reviewed and under contract.
Dealpath: What led Avanath to search for a deal management solution?
Connor: Over our 14 years as a firm, we’ve grown quite significantly, which means we thoroughly review quite a large pipeline as a firm. We were using generic tools like Excel and Monday.com, which aren’t great solutions for managing a real estate pipeline. We started to look at other options, and Dealpath quickly emerged as the best solution.
Dealpath: After selecting Dealpath, how did you manage and enforce the organizational process changes?
Connor: We were deeply rooted in our old processes, but Dealpath made everything that we do so much easier. The simple and engaging user interface led to seamless adoption across the firm–from the partner level, to my level, to the analyst level. The platform is so easy to use for sourcing, managing and reporting on deals.
Dealpath: How has Dealpath changed the way that you review deals?
Connor: When we look at a deal, our priority metric is the IRR. We typically like to be in the range of the low-to-mid teens. To screen deals, we create models in Excel, then drag and drop them into Dealpath to track everything appropriately and find the most important metrics. We can then look at loan proceeds, unlevered and levered returns, cap rates and other metrics, which are pulled into a one-page summary. Having all of the bottom-line metrics in the one-page summary allows us to look at this information in a clean format. We can compare deals to other pipeline deals, as well as historical comps.
Dealpath: What happens from there?
Connor: When deals do match our target profile, we’re already one step closer to pushing them forward. We can take all of the information in the one-page summary and seamlessly create an IC memo to share with the committee during the next meeting. Before Dealpath, we spent hours cobbling together long summaries into emails, but this functionality makes it much easier to present real-time information in the right format. Now, we can generate an IC memo based on the data, write an abstract, and add it to the agenda. It’s a frictionless process that helps us deliver the right information to our investors, with clear visualizations that tell the story for us.
Dealpath: As deal management software becomes the new gold standard for investment managers, the pace of transactions in the market has picked up. Has Dealpath helped Avanath to keep pace?
Connor: Absolutely. I think one of the biggest challenges for executing deals in a tight time window is the sheer number of due diligence steps and parties involved, especially for complex portfolio transactions with several properties, each of which might have a few moving pieces. The standardized workflows in Dealpath give us peace of mind in knowing that we’ve reviewed every necessary step, and that we’re looking at up-to-date documentation. It also helps us collaborate because we can assign tasks to another team member or department, and keep a record of that in one centralized place.
Dealpath: How have you changed how you communicate internally?
Connor: Dealpath’s reporting feature has simplified how we share information within the company. When we used Excel and Monday.com, we didn’t have the best reporting tools at our disposal–we typed in everything manually. Dealpath has helped us keep things organized and up-to-date. We have several automated reports generated each week, which helps us stay up to date on pipeline deals and priorities. These reports also help us to keep senior management and other teams informed about new pipeline activity. I can’t imagine working at the scale we do now without Dealpath’s reporting.
Dealpath: After spending one year on Dealpath, how have your top-line metrics changed?
Connor: To start, we reviewed double the number of pipeline deals in 2021. We closed and committed over $1 billion in real estate, which is a record for Avanath. Now that we’ve built this baseline, which we previously did not have visibility into, we can set benchmarks. Our goal is now to deploy $1 billion in capital or more each year moving forward. Through the first half of 2022, we already have approximately $1.2 billion of real estate that is closed or committed.
Dealpath: How many additional team members did you hire?
Connor: We accomplished this with the same headcount. Part of what makes Dealpath so valuable to our team is the ways that it allows us to work so efficiently. Dealpath automates and streamlines nearly every leg of the process, which gives us so much time back in any given day. Now, we have the bandwidth to review even more deals and continue growing.
Why It’s Time to Embrace Highly Trusted, Purpose-Built Tools
By now, it’s clear that deal management software can systematize data-driven investment decisions and pave the way for top-line revenue growth–but not all platforms are created equal. To succeed in a competitive market, your firm must find the best option for your needs.
Learn more about why it’s time for a deal management platform by downloading our free white paper.