Creating a Deal with Documentation
Welcome to Blooma, This is your Blooma pipeline. If you’re not already familiar with the layout and features here you can always go check out our help articles on the support page to get better acquainted. To get started in Blooma, let’s begin by creating a Deal. If you’ve already received initial Deal package documents such as an OM, P&L, and or Rent Roll from a borrower or broker, we’ll upload those here using Intelligent Deal Creation. These documents will be automatically parsed for significant Deal level data and will be merged with market data provided by Blooma. This only takes a few minutes and Blooma will notify you when your Deal is finished being created. If you haven’t received an initial Deal package, that isn’t a problem. Upload the documents you have, or use manual deal creation and create a Deal with just an address! You can always go back and upload documents received later through the Document Upload Center located on the Deal Summary page following initial Deal Creation.
Understanding Location, Market, and Submarket
Post Deal Creation, each Deal will have it’s own Deal Summary page displaying a 360 degree view of significant Deal data organized into various sections. Check out our high level data including visuals and interactive charts to quickly analyze loan metrics, property details, market info, and property financials. The Deal Summary page will set you up to begin digging deeper into each aspect of the deal to select, edit, and make decisions to identify and mitigate risks.
Identify and Review Comparables
After you’ve achieved a good understanding of your asset’s market and submarket, you can begin to identify and review comparables. Property level data will be utilized to provide the most accurate sales and rent comps available, in one place and from multiple market data providers. Each comp within the system will be automatically graded and selected based on your lending preferences reflected in your Comp Ranking Profile. Given Blooma utilizes a scientific method to grade and select comps, it is recommended for all comps (included & excluded) to be considered while using our filtering/search capabilities to narrow down the results. Comps can be filtered using a robust set of criteria ranging from year built/renovated, distance, sale price/date, building size, and unit count. The ability to create comparables manually is also available. These comps will be included in your overall set and can also be included or excluded from the final selection. The option to refresh your comp set based on newly released information helps keep your selections up-to-date as you continue the underwriting process. Drawing a shape to capture a trade area can be particularly useful, as opposed to setting distance limitations, for defining distinct neighborhoods containing buildings of like kind. Comps can also be displayed on either a per square foot or per unit basis, depending on your analytical approach.
Rent Roll Analysis
After you’ve identified and reviewed your comp set, we can begin to review the Rent Roll section. The Rent Roll section begins with a summary which includes pertinent data such as total revenue, vacancy, and SF/units so you can obtain a high-level understanding of the property’s current status. A unit mix reflective of the rent roll is also displayed, and compares in-place rents to the same from the comp set. The Lease Expiration Schedule based on the rent roll helps manage rollover risk so assumptions can be made for tenants who may vacate the property. The Rent Roll is parsed into the Rent Roll Details section which captures various fields ranging from monthly rent to unit type. Multiple rent rolls can be parsed using the document upload center, or manually created by a user. A Smart Rent Roll, defined as an in-place rent roll which marks vacant space to market rent, can be used to formulate a Gross Potential Rent assumption. Rent rolls can be compared with the comp set. This can be done on a PSF or per unit basis, broken down by unit type, to gauge where rents currently stand relative to the market.
Develop Underwriting Scenarios
Next, we can begin to develop our underwriting scenarios. The Property Income Valuations section contains multiple options:
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A market income valuation (P&L) complied by Blooma using rent comps, market vacancy, and other income / expense assumptions from various databases
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Parsed or manually created historical, pro forma, and/or bank underwriting P&L’s
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Construction Budgets
Any valuation can be duplicated, and, using the Edit Cash Flow feature, you can edit underwriting assumptions in real time. An unlimited amount of P&L’s can be stored in this section, and compared on a line item-by-line item basis to identify performance trends. A 5-year DCF can be applied to any P&L, and edited to produce a Net Present Value. Included sales comps are averaged by Blooma to produce a sales comp valuation on a PSF or per unit basis. Alternative Valuation amounts can be manually entered, and typically include Borrower, OM, and appraisal valuations as well as a purchase price when applicable.
Analyze Borrower/Guarantor Financials
Contact creation allows for both Borrower & Guarantor analysis to identify potential credit risk posed by their financial health. Determine whether or not policy thresholds are met as they relate to credit score, net worth and liquidity. Utilizing the Document Upload Center allows for PFS, SREO, and Tax Return parsing capabilities, saving you time on manual data entry. Once the significant data points are parsed, calculations will be made and incorporated in the Blooma analysis to be considered in overall deal strength. One thing to note: Never re-enter current financial data as it relates to Contacts (Borrowers & Guarantors) used recurringly. Contacts created with financial data in the system allow for assignment to as many existing Deals they are associated with.
Determine Loan Terms
When you’re ready to determine the terms of a Loan, stress testing functionality allows you to manipulate variables such as revenues, expenses, and interest rates, amongst others, and evaluate the resulting credit metrics against those resulting from your Primary Income Valuation. This can be done using pre-programmed high, medium, and low options, as well as the ability to fully customize the parameters. The Complete Stress Test section includes a matrix displaying a side-by-side comparison of all metrics included in the multi-variable stress test section above at each of the four stress levels. In addition, the Deal Sizing feature is particularly helpful when determining a final loan amount for your term sheet or committee presentation. Credit metrics (LTV, DSCR, and debt yield) can be defined, as well as loan economics such as interest rate and structure (amortizing or interest only). Maximum loan amounts are displayed reflecting these assumptions.
Complete Underwriting Package
Once the underwriting has been finalized, you can export any applicable information from Blooma to an in-house or Blooma standard underwriting template in real time. After importing the data from Blooma, complete any unmapped fields in the template to finalize your analysis and presentation.