To Make Deals Happen, Asset Owners Need To Use The Right Tech For Data Sharing

Real estate deal volumes in Q4 2022 were down in almost every European country. For those with an asset to sell, conditions have been tough.

What the industry needs is a new way to collate and share information to make deals as simple as possible, according to Alexandre Grellier, CEO and co-founder of virtual data room provider Drooms. But to make the most of this technology, the industry must accept that it’s time for change.

“I’d say that 1% of change happens because someone has a vision and 99% happens due to pressure,” he said. “For the last 12 years, whatever real estate owners did, it worked. If they wanted to sell real estate, they could. If they wanted to sell it without anyone doing thorough due diligence, they could. Today, there are challenges and they need to find a new way forward.”

There are three reasons why a company decides to digitise, Grellier said: for processes to be faster, more transparent or cheaper. Drooms was founded to achieve these three goals. The company provides a virtual data room to store all information related to an asset, which property owners can share with potential buyers or investors. 

“We felt that the way a transaction is done needed to change,” he said. “Now more than ever, current market conditions require smooth interaction between all parties involved in an asset.”

The volume of information required by an asset owner has increased in recent years, Grellier said. The arrival of environmental, social and governance requirements has played a large part in this. Documents need to detail energy audits, technical inventories, digital collections of consumption data and CO2 emissions from buildings.

“Due to ESG regulation, asset owners are increasingly being required to provide a transparent and accurate ESG disclosure when selling their assets,” he said. “This is a relatively new development so not all owners know exactly what documentation they are required or even where they should source this information from. It’s not something they have had to report on previously.”

While the amount of data required has increased, so has the need to have data to hand over quickly and transparently, Grellier said. In a tough market, it pays to have documents in order. 

“Buyers are asking complicated questions, so you had better have your documentation together,” he said. “In some cases certain important documents get lost and this can negatively impact the price of an asset. Buyers can negotiate down the sale price if there is vital information missing.” 

This year, Drooms has launched its LIFECYCLE product. All data is stored in a single platform, which can be easily kept up to date. Suppliers such as consultants or property managers can also upload files, building up a comprehensive history of an asset within the data room.

Grellier has witnessed several cases where a deal has fallen through because the seller wasn’t able to facilitate due diligence quickly enough. This had a knock-on effect on the price achieved when properties were finally sold.

“Before, people only got their documents in order when they wanted to sell a property,” Grellier said. “During the phase when an owner held an asset, information dispersed. Then, when they wanted to do something with the property, perhaps rent it out, make changes or sell, they didn’t have information. If you have documentation in order, then due diligence can be performed in the fastest possible way and you increase your chances of a deal going through.” 

One of the core functions of Drooms LIFECYCLE is the in-built translation tool. Documents are translated into languages at the request of a viewer, immediately. This can help a property owner attract a larger crowd of interested buyers, which often includes overseas investors, Grellier said.

Using a data room also gives a property owner complete control over who can access information at any time. When a data pack is sent to a potential buyer, information can’t be rescinded or altered. In contrast, access can be turned off to a virtual data room.

“If you decide a person isn’t a serious buyer, you might want to remove access to the data room,” Grellier said. “You will know what they have seen, because you’ve got the statistics. This provides complete transparency.”

The ability to share different information with different groups brings in another party: the tenant. In the past, tenants didn’t need to share much information with property owners, Grellier said. Today, ESG requirements ask property owners and tenants to share information about factors including energy or water use. Using a data room, everyone in a building’s ecosystem can access what they need, from lawyers to investors.

There is a growing understanding of the need for digital information platforms, Grellier said. Although the real estate sector is a long way off seeing their full potential, there’s a growing acceptance that change is necessary.

“There’s definitely a feeling that current processes aren’t working,” he said. “At the end of the day, their business is real estate not tech. Even though a lot of companies’ mission statements say they are becoming technology businesses, they’ve had this available for 10 years and nothing’s really happened. Now, with ESG and a complex market environment, they see the need to implement technology and adapt it to their needs.”

This article was produced in collaboration between Drooms and Studio B. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to [email protected].