For the Archer platform, this is a case study on how to increase underwriting capacity without adding headcount.
RREAF is a privately held commercial real estate firm with 4.3b AUM and 100 years combined experience on the executive team. They are based in Dallas, Texas and have been successfully acquiring, developing, managing, owning, repositioning, and financing complex real estate projects throughout the U.S. since their founding in 2010. RREAF invests in a range of assets including multifamily, hospitality, ground-up development, and master-planned communities. Through its multifamily platform and its family-oriented vacation properties, RREAF provides America’s workforce with superior, affordable housing.
RREAF’s multifamily acquisitions team is lean, consisting of 7 people total. Of these, there are typically one or two people charged with underwriting. Because RREAF is opportunistic, many deals that hit the market are worth exploring as a potential investment—what matters most is that each investment has a strong return profile. With so many deals to look at and limited underwriting capacity, some deals are inevitably missed or passed over.
While RREAF can typically underwrite a property in about an hour—which is very fast compared to most of Archer’s clients—they still don’t have time to look at every deal they’d like to. This could mean potentially missing out on deals. RREAF set out to find a way to increase their underwriting capacity, without adding headcount to their team.
RREAF heard about Archer through an article in the press. They initially joined Archer as deal sourcing client. This means we learned about RREAF’s buy-box and helped source off market deals for them. As soon as Archer launched is automated underwriting platform, we approached RREAF since we knew about their desire to increase their underwriting capacity.
RREAF engaged in a brief trial with Archer to validate our platform on a technical basis. They verified that we could fulfill a request for an underwriting—with or without a T-12—in under an hour. Also, they examined our data and comps to ensure the integrity of the information was what they expected. As soon as the trial was over, they quickly determined that Archer’s Automated Underwriting was a great fit for their business and could help them look at more properties with the goal of getting more deals done.
Archer has helped RREAF increase underwriting capacity in the last couple of months. For example, we’ve underwritten a six-asset portfolio in Tennessee with no T-12s. RREAF also had Archer underwrite a variety of properties with T-12s, including an eight-asset portfolio in Georgia and South Carolina.
In some situations, RREAF has changed their mind on where an asset would trade based on Archer’s underwriting. In other instances, they have used Archer’s models as an objective “second opinion”, used to help hone their analysis before submitting an LOI. The expense comps have been particularly useful when evaluating deals, and they have included sales, rent and opex comps in their investment committee memos.Since working with Archer, RREAF has been able to increase underwriting capacity without hiring an additional analyst which could have cost upwards of $100,000.They expect to spend 240 fewer hours underwriting annually.