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underwrite

English translation: evaluate / assess the investment potential/value of a property

GLOSSARY ENTRY (DERIVED FROM QUESTION BELOW)
English term or phrase:underwrite a property
Selected answer:evaluate / assess the investment potential/value of a property
Entered by: Daryo

12:58 Aug 5, 2020
English language (monolingual) [PRO]
Bus/Financial - Business/Commerce (general) / property portfolio management
English term or phrase: underwrite
[The firm's] employees underwrite and manage a property portfolio of XXX billion.

I'm not sure I understand exactly what "underwrite" means in this context.
Guarantee? Insure?

Thank you!
Laura Vinti
United States
Local time: 10:24
evaluate / assess the investment potential/value of a property
Explanation:


5 Underwriting Variables Critical to Value Add Real Estate Investing

• By Phil Schuholz • August 28, 2018 7,355


5 Underwriting Variables Critical to Value Add Real Estate Investing

How do private equity real estate firms know if an office or multifamily property is worth the investment risk? Will it turn a profit and increase in value, or underperform and lose money? That’s where underwriting comes in — the process of evaluating a property to determine its viability and potential.

When done right, underwriting is a complex and rigorous process. It involves analyzing the consequences of hundreds of variables — from the assumed purchase price of a property relative to its competitive set to replacing HVAC to the cost of a fresh coat of paint. All these details can make or break the desired return and have a significant role in the real estate underwriting process. However, some have a greater impact on returns than others.
...
https://origininvestments.com/2018/08/28/5-underwriting-vari...


the company is a real estate investment company, so this meaning of "underwriting" is the relevant one.

"Historically the exclusive real estate investment arm of AAA and its major insurance subsidiaries, AAA Real Estate has built a broad and deep organization across its primary markets in Europe as well as the US and the Asia-Pacific region. Its 440 employees underwrite and manage a property portfolio of more than €70 billion, the majority of which represents investments in core and core-plus real estate equity, as well as a meaningful presence in private real estate lending."

etc ... part of the press release on the new parent company's website.

Selected response from:

Daryo
United Kingdom
Local time: 15:24
Grading comment
Thank you for your well-thought out answer and for backing it up with research!
4 KudoZ points were awarded for this answer



SUMMARY OF ALL EXPLANATIONS PROVIDED
5 +4evaluate / assess the investment potential/value of a property
Daryo
5 -1Guarantee
Pallavi Mehta
3review loan applications to determine the amount of risk involved
Teangacha (X)
4 -1determine insurance premium to be paid (by assessing all risks)
Yvonne Gallagher
5 -2Check the borrower's ability to repay the loan
Sophie Meis


Discussion entries: 8





  

Answers


5 mins   confidence: Answerer confidence 3/5Answerer confidence 3/5
review loan applications to determine the amount of risk involved


Explanation:
https://www.fortunebuilders.com/underwriting-real-estate/

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Note added at 21 mins (2020-08-05 13:19:28 GMT)
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https://www.investopedia.com/terms/u/underwriting.asp

Phil is correct. There are three types of underwriting: loans, insurance and securities. Which it is, in this particular case, depends on the firm in question.

Teangacha (X)
Ireland
Local time: 15:24
Native speaker of: English

Peer comments on this answer (and responses from the answerer)
neutral  philgoddard: This was the definition I found, but I wasn't sure if it fits the context. I would expect a bank to do this.
5 mins
  -> Thanks, Phil. See my added note.
neutral  Daryo: very close - only this company is not applying for any loans, they are investing their own capital in properties - they are doing this evaluation for themselves. As it happens this ST is NOT about loans, NOR insurance NOR securities.
9 hrs
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17 mins   confidence: Answerer confidence 4/5Answerer confidence 4/5 peer agreement (net): -1
determine insurance premium to be paid (by assessing all risks)


Explanation:
https://www.investopedia.com/terms/i/insurance-underwriter.a...

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Note added at 19 mins (2020-08-05 13:17:14 GMT)
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so, in effect, it amounts to insurance if the applicant is accepted and pays the premium required

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Note added at 26 mins (2020-08-05 13:24:23 GMT)
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ignore last line! Underwriters are not necessarily just working for insurance industry industrym as there are different types of underwriting

https://www.investopedia.com/terms/u/underwriter.asp

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Note added at 32 mins (2020-08-05 13:30:11 GMT)
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https://en.wikipedia.org/wiki/Underwriting

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Note added at 34 mins (2020-08-05 13:32:23 GMT)
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guarantee payment in case of damage or financial loss and accept the financial risk for liability arising from such guarantee.

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Note added at 36 mins (2020-08-05 13:34:16 GMT)
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In evaluation of a real estate loan, in addition to assessing the borrower, the property itself is scrutinized. Underwriters use the debt service coverage ratio to figure out whether the property is capable of redeeming its own value.



Yvonne Gallagher
Ireland
Local time: 15:24
Specializes in field
Native speaker of: Native in EnglishEnglish
PRO pts in category: 79

Peer comments on this answer (and responses from the answerer)
neutral  philgoddard: Yes, if it's an insurance company, and by property portfolio they mean property insurance.
9 mins
  -> yes, after writing first bit I needed more info re the company involved hence the 2nd link (which I see has been added to other answer now) so adding another link
disagree  Daryo: It does take few seconds to find the company in question and see that it's not an insurance company, (nor a bank/lender)/"Not up to us to be sure that we have all the relevant background info"?? So just pluck out of the hat first meaning you like?
9 hrs
  -> Really? Not up to us to go looking for companies...
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40 mins   confidence: Answerer confidence 5/5 peer agreement (net): -1
Guarantee


Explanation:
Here it means employees of the firm guarantees for [funds or other asset] and manage property portfolio of XXX billion.

That means if firm will not able to raise funds from outside/market for the management of specific amount of portfolio, its employees will invest in the firm and manage the property portfolio of targeted amount.

Pallavi Mehta
India
Local time: 19:54
Specializes in field
Native speaker of: Native in GujaratiGujarati

Peer comments on this answer (and responses from the answerer)
disagree  Daryo: reality check: how many employees have enough of their own pocket money to invest (or even just give guarantees for) in the range of XXX billions? not very likely! It ought to be some other meaning of "underwriting" ...
8 hrs
  -> employees can get investors as well, like in mutual funds and stock broking companies.
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9 hrs   confidence: Answerer confidence 5/5 peer agreement (net): +4
the real estate underwriting process
evaluate / assess the investment potential/value of a property


Explanation:


5 Underwriting Variables Critical to Value Add Real Estate Investing

• By Phil Schuholz • August 28, 2018 7,355


5 Underwriting Variables Critical to Value Add Real Estate Investing

How do private equity real estate firms know if an office or multifamily property is worth the investment risk? Will it turn a profit and increase in value, or underperform and lose money? That’s where underwriting comes in — the process of evaluating a property to determine its viability and potential.

When done right, underwriting is a complex and rigorous process. It involves analyzing the consequences of hundreds of variables — from the assumed purchase price of a property relative to its competitive set to replacing HVAC to the cost of a fresh coat of paint. All these details can make or break the desired return and have a significant role in the real estate underwriting process. However, some have a greater impact on returns than others.
...
https://origininvestments.com/2018/08/28/5-underwriting-vari...


the company is a real estate investment company, so this meaning of "underwriting" is the relevant one.

"Historically the exclusive real estate investment arm of AAA and its major insurance subsidiaries, AAA Real Estate has built a broad and deep organization across its primary markets in Europe as well as the US and the Asia-Pacific region. Its 440 employees underwrite and manage a property portfolio of more than €70 billion, the majority of which represents investments in core and core-plus real estate equity, as well as a meaningful presence in private real estate lending."

etc ... part of the press release on the new parent company's website.



Daryo
United Kingdom
Local time: 15:24
Specializes in field
Native speaker of: Native in SerbianSerbian, Native in FrenchFrench
PRO pts in category: 12
Grading comment
Thank you for your well-thought out answer and for backing it up with research!

Peer comments on this answer (and responses from the answerer)
agree  Suzie Withers
31 mins
  -> Thanks!
agree  Anastasia Andriani
6 hrs
  -> Thanks!
agree  Teangacha (X)
10 hrs
  -> Thanks!
agree  AllegroTrans: as part of their employment presumably but not at personal risk
12 hrs
  -> exactly - that was what looked to me extremely weird at first OTOH having clarified what "underwriting *a property*" means, it does make perfect sense - it's their job to assess possible investments in real estate on behalf of their employer. Thanks!
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2 days 21 mins   confidence: Answerer confidence 5/5 peer agreement (net): -2
Check the borrower's ability to repay the loan


Explanation:
"Underwriting is the process that banks and other financial institutions use to assess the creditworthiness or risk of a potential borrower. During this stage of the loan process, the underwriter checks the borrower's ability to repay the loan based on an analysis of their credit history, collateral, and capacity." (Bankrate.com)

Sophie Meis
Australia
Local time: 00:24
Native speaker of: Native in Persian (Farsi)Persian (Farsi)

Peer comments on this answer (and responses from the answerer)
disagree  Daryo: CL5??? Have you read what was posted before by others? Where are in the ST the clues that this company is a bank / financial institution? I missed them ...
5 hrs
disagree  AllegroTrans: I can't see anything here about borrowers and loans, just management of property
2 days 23 hrs
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