The Human Experience when dealing with GCG Investment
The questions we asked ourselves at GCG Investment, were at first of an epistemological nature and slowly shifted into more operational ones. Now, what is an experience? Is it something only customers live with? How do we create extraordinary, memorable experiences? We formed our opinions by understanding the different answers to these questions given by academics and industry professionals.
Here is what we learned:
In a service context, customer experience is a long-term relationship between two people: the customer and the employee representing a company. It is a living thing: a human interaction! It isn’t JUST business, it’s VERY personal. Every interaction is personal and unique. And, as the following figure shows, it’s not just about the customer. The employee plays a very important role in this encounter, and the experience is co-created with the customer.
We at GCG Investment pay attention to people
Customer Experience is not just about customers, It is human interaction (This repeats from the text above, suggest to delete). We at GCG Investment pay attention to people because attention can lead to peak moments and those moments lead to a long-lasting co-creative relationship which in turn will pay out in terms of sales, loyalty, and advocacy.
Here are a few key takeaways from our experience:
- We start creating an experience mindset throughout your company.
- We empower our employees to act and deliver a meaningful experience on the spot.
- We maintain the ‘Essential Experience’ through consistency in all your touchpoints.
- We strive for peak moments whenever possible through elevation, pride, and insight.
- We learn more about your values, and preferences and build your Intelligence database.
We provide you with an overview of our services:
We are heavily involved in hotel real estate transactions. We have just completed a hotel sale in Tunisia and are currently working with the previous and new owners on the handover of the business with 400 employees.
A new set of tasks related to assessing the suitability of operators for specific projects is evolving rapidly in the operational area, surpassing initial expectations.
Real Estate
Have become increasingly important in recent years, gained in importance. The real estate industry is confronted with new practices from the international national transaction business. This real estate due diligence is an essential part of complex transactions and integral part of complex transactions
The due diligence
Fundamentals of due diligence
1.1 Explanation of terms and objectives Property due diligence is the term used to describe the due diligence customary in the examination of a property purchase. By means of a well-founded analysis and systematic examination of the object of the transaction, the essential opportunities and risks are to be recorded. The aim is to create a “no surprise” situation and to know all the facts connected with the object of sale. Due diligence is often carried out under great time pressure, which is why a systematic approach is essential.
1.2 Integration of due diligence into the transaction process on the buyer side, the transaction process begins with the definition of the requirements profile for the property acquisition. The buyer draws up a catalog of criteria (e.g. type, location, and size) based on his preferences.
In the second phase, suitable objects for purchase are identified based on documentation provided by the seller. If the profile of an object largely matches the catalog of criteria, the buyer makes an initial decision as to whether the offered object should be pursued further. In this phase, the seller usually wishes to receive initial feedback on a possible purchase interest and often demands a non-binding offer.
In the next step, the buyer carries out the actual real estate due diligence and examines the object of purchase in detail. After due diligence has been completed, the transaction is contractually implemented. During the contract negotiations, debates take place about the sales price and contractual guarantees on the part of the seller. This process ends with the signing of the contract and the subsequent transfer of ownership (closing).
1.3 Types of real estate due diligence the term due diligence is usually understood to mean the examination of the property by the buyer (buyer’s due diligence). More and more frequently, however, the seller also carries out a so-called vendor’s due diligence, in which he prepares for the sale. This allows him to recognize any weaknesses in the transaction object and to protect himself against negative surprises after the sale.
1.4 A clear definition of objectives can ensure that the entire due diligence process is carried out in a focused manner and that no unnecessary and useless information is collected.
A. The type and scope of due diligence are derived from the purpose of the audit, the type of project, and the transaction’s structure. For example, the scope of due diligence for a large portfolio transaction is different from the scope of due diligence for the acquisition of a single property. The focus of the due diligence must also be different depending on the structure of the transaction: For example, in the case of a direct acquisition of real estate (so-called asset deal), the degree of tax examination is much more limited than in the case of an acquisition of a share in a real estate company (so-called share deal).
B. Due diligence is ideally organized as a project and is characterized by the interdisciplinary cooperation of experts in real estate, finance, taxes, construction technology, the environment, and legal issues. A project manager takes over the coordination and is responsible for the fulfillment of the audit objectives. He ensures that the time and financial targets are met.
C. Information procurement is of crucial importance in due diligence processes. On the one hand, the temporal availability and, on the other hand, the reliability of information are of relevant. A further distinction is made between internal and external sources of information. Internal sources of information refer to the information provided by the seller. Such data is often strictly confidential and therefore the members of the due diligence team must adhere to strict confidentiality rules. Depending on the type of transaction, internal sources of information include special data rooms, meetings with management, and property inspections. External sources of information for due diligence are primarily independent market and location studies as well as expert surveys.
D. Due diligence can be divided into different sub-processes with different core questions. Inevitably, there are also intersections that require special attention and coordination on the part of the project management. The scope and focus of the processes depend on the employer’s specifications, the type of property, and the transaction structure.
E. The Market Due Diligence in the context of market due diligence, the location, and the market environment of the property are systematically investigated. This analysis is of great importance, as the principle applies that a bad building can be replaced by a better one, but a bad location cannot!
F. Due Diligence is the comprehensive legal examination of a property. The most important factual questions in the context of legal due diligence concern the situation under property law (extract from the land register, easements), the situation under planning and licensing law (conformity with building permit and building/zoning regulations) and the tenancy agreements (conditions and clauses). Another subject of the due diligence is the examination of facility management and service contracts, the examination of the construction contract situation (possible warranty claims/securities in case of construction defects), the evaluation of pending legal disputes as well as the analysis of other contracts and documents (e.g. insurance policies). In the case of the acquisition of a real estate company (share deal), there are additional questions of company law, such as conditions according to the company statutes or questions of liability under company law.
G. Tax due diligence assesses the tax risks of the acquisition of a property. In the case of a direct acquisition of real estate (asset deal), this tax research primarily includes property taxes and transfer taxes. In the case of a direct acquisition of a property (asset deal), the tax research primarily includes real estate taxes and real estate transfer taxes, and clarifications in connection with value-added tax can also be of great importance (possible value-added tax optimization of a property).
H. The Technical due diligence content of the technical due diligence is the structural and technical analysis of the building. Usually, the examination includes both property inspections and formal examinations. Property inspection during a property inspection, an inventory is made, and all building components are recorded and assessed with regard to construction, condition, functionality, and quality. Particularly in the case of Hospitality properties, a distinction must be made between the building fabric (shell, façade, roof, exterior installations) and the interior fittings, as the fitting out of the usable area is usually carried out by the tenant and is not part of the property in the narrow sense. The technical building analysis includes the recording and evaluation of all building equipment (heating, ventilation, cooling, and building automation). A component of the property inspection is also the determination of structural defects and necessary repair or maintenance work. Formal inspection in the formal inspection, all plans and documentation documents are to be examined. In this area, emphasis should be placed on the plausibility of area and cubature calculations as well as on the flexibility of the area structure (possible room divisions; F&B “Food and beverage” gastronomical facilities, Spa’s and Recreation areas, etc. (multi-tenancy).
I. Environmental due diligence is the examination of environmental risks in connection with a real estate transaction. Although this sub-process has only become generally known in recent years, it has come to play a key role in due diligence because of the high risks involved. It is essentially important as this topic determines the future of the Tourism & Hospitality Business.
K. Financial due diligence is the financial assessment of the property. It is based on the results of the other sub-areas of due diligence and includes all the financial effects that emanate and can emanate from property investment. Within the framework of a financial analysis, the future cash flows of a property are projected and discounted on a risk-adjusted basis. In contrast to a classic property market value assessment (market value/fair value), the financial analysis takes the perspective of a specific investor and determines the value in use (investment value/value in use), considering the investor’s strategy. The investment value should therefore show the effective value of a property for a specific. This value is neither to be equated with the market value of the property nor does it have to correspond to the possible purchase price. Relevant cash flows on the income side are the forecasts of target rental income and corresponding reductions in income due to vacancies. Expenditure estimates include – management costs (operating costs, administration costs, maintenance costs), – maintenance work, and – any planned investments such as conversions or extensions. Discounting is carried out based on the cost of capital and taking into account the risk of the investment.
The due diligence Report
In a project completion, the due diligence report summarizes the findings from the various sub-processes. The most important part of the due diligence report is the mandatory criteria, i.e., criteria that cannot be removed.
These can be Area uncertainties:
- pending maintenance backlogs,
- unfavorable lease clauses,
- poor creditworthiness of tenants or
- high vacancy rates.
- A contractual commitment to a hotel operating company
- Remaining contract duration of the hotel operator
- Suitability of the hotel operator for the hotel property under review
- The flexibility of the operator’s structure, are there several hotel brands available
- Can the new investor rebrand the hotel?
The due diligence report provides the investor with a basis for deciding whether a property is still of interest and whether contract and purchase price negotiations should begin. The buyer prepares a negotiation strategy based on the results of the real estate due diligence and can define his ideas about the purchase price and the contract clauses. The findings of the due diligence can also be useful after a transaction has taken place, as they provide an unsparing disclosure of the actual situation and a helpful basis for future property management, such as for budgeting investments and for future lease negotiations.
Conclusion
Real estate due diligence has become an integral part of today’s real estate transactions. The decisive factor is the concentration on the core processes of due diligence that are essential in the individual case and the setting of focal points. Due diligence reduces the buyer’s risk and makes an important and valuable contribution to the overall success of real estate transactions.