Dealpath Case Study
As we gradually imported all of our data and processes into Dealpath, we discovered new ways that we could optimize our investment process and leverage our data.
T2 Capital Management is an opportunistic, privately-held real estate investment firm that is based in Chicago. Since its founding in 2011, T2 has deployed $900+ million across the entire capital stack and among virtually all property types. The firm has created a niche in swiftly executing investments of $1 – 15 million on properties that require a total capitalization of $2 – 50 million. Each investment is designed to serve as a customized capital solution that is tailored to meet specific objectives and lead to a mutually desirable outcome among T2 and its counter-parties.
T2 Capital Management began as a small shop making debt and equity investments in commercial real estate. During its early stages, T2’s tight-knit team deftly managed both their acquisitions pipeline and debt investments by communicating via email and tracking deals in Excel. As T2 grew its team, property count, and loan portfolio, they started to experience growing pains, which were difficult to diagnose and resolve due to their diversified portfolio.
On the one hand, their acquisitions cycle faced many of the challenges that teams of all sizes typically face: decentralized task management, timeconsuming reporting, and duplicative spreadsheets. When new properties piqued their interest, an acquisitions team member emailed the investment team with relevant information. Much of the pipeline was simply tracked in spreadsheets, and tasks were generally assigned amongst the team via email. As it grew, T2 knew there must be a better way to manage incoming and outgoing data points.
The lending arm of T2’s business, however, imposed a separate set of challenges entirely.
“Debt and equity investments were both primary drivers for our bottom line, but our internal processes and workflows were very different for the two portfolios,” said John Felker, T2’s Co-Chief Investment Officer. “Due to our independent tracking systems for each business line, it was difficult to understand the big picture without first checking numerous spreadsheets.”
Through its managed debt funds, T2 issues first mortgages and mezzanine financing for third-party borrowers, often with varied credit profiles and time-sensitive needs. Its investment team meets on a weekly basis to review the deal flow and potential investments. The origination team completes underwriting and, ultimately, each transaction is reviewed by the investment committee. Beyond underwriting first mortgages and mezzanine loans, the T2 team is also responsible for generating customized investor reports, a process that became increasingly unscalable.
Unlike standardized pipeline reports, investor reporting involved taking into account which properties they had invested in, their stake, and other unique factors. Some investors held a substantial stake in one property, which required an in-depth analysis detailing how the property was performing. Others had a lower stake across a large loan portfolio, which instead called for a high-level overview of the various investments and aggregated analyses. Their team manually built out every report using Word and Excel.
To simplify reporting and unify transactions across business lines, T2 set out to look for a project management tool. While they considered building their own solution with an open-source tool like Salesforce, they also recognized the trade-offs: cost, development time, and the burden of managing platform updates over time. Other project management tools they considered lacked the industry specificity their nuanced process required. Eventually, they started investigating tools that were purpose-built for commercial real estate, and after completing their search, settled on Dealpath.
“Once we narrowed our search and better understood the deal management category, we decided on Dealpath,” said Aaron Tink, T2’s Portfolio Manager. “There are no true competitors that can do what Dealpath does in the same robust, highly configurable fashion.
Dealpath has cut down on the time we spend on certain tasks and automated others, but it’s also directed our attention to a lot more strategic work. The platform has allowed us to do many things we’d never attempt to do otherwise.
After landing on Dealpath as the definitive deal management solution, T2 began the process of configuration. While they wanted to optimize internal processes and achieve streamlined workflows, their primary goal was to create a framework that would allow them to easily input, track, reference and leverage current and historical data for both property acquisitions and debt investments.
To accomplish this, T2 started by mapping their fields and views to recreate and standardize unique workflows for these two significantly different ventures, while giving their data one secure home. Their customer success manager, Patrick Gruer, and implementation manager, Greg Pennington, configured the more complex data and info views. As they progressed through the configuration process, the T2 team configured some on their own.
“As we gradually imported all of our data and processes into Dealpath, we discovered new ways that we could optimize our investment process and leverage our data,” said John. “We’d ask our customer success manager, Patrick, if what we envisioned would be possible. The answer was always ‘yes’!”
As a bridge lender, it’s not uncommon for T2 to consider the same lending opportunities multiple times. In molding Dealpath’s lending functionality to their organization, they wanted to create an archive of deals they had previously considered, which would allow their team to maintain a clean, consistent record of the context surrounding each deal.
“If we see a deal resurface for the second or third time, we can immediately check our records to learn why it didn’t move forward,” said John. “Previously, we had to hunt deals down in our inboxes and server files to determine where we left off. This saves our team valuable time, helping us review more opportunities at scale.”
To eliminate the monotonous process of creating investor reports from scratch, T2 wanted to capitalize on Dealpath’s reporting tools. They also found value in the external collaborator functionality, which helped them easily input accurate data from outside sources without requiring additional work on their end.
With Dealpath in place, T2’s acquisitions process is very well organized and much more scalable. Instead of fielding emails from team members about new pipeline deals, the team simply updates deal data within Dealpath as it flows in, ensuring that everything is up-to-date and bypassing spreadsheet access issues. As a result, much less work is required to prepare for weekly pipeline meetings.
T2 used the Dealpath implementation as an opportunity to formalize their lending process, eliminating ad-hoc processes that previously required more work to achieve high-level visibility across upcoming investments. By creating deal benchmarks, T2 standardized what deal information they view when initially considering the deal, during a second evaluation, and immediately before closing. This standardization has helped allow the team to review only the pertinent information and scale their investing process in ways that weren’t previously possible. Their team can now share information and highly customizable reporting with investors, lenders, and other financial partners, as well as export underwriting information.
As dead deals resurface, their team can quickly move deals back to underwriting, maintaining institutional context about why the deal didn’t move forward, and providing the opportunity to make competitive offers. Viewing and evaluating deals in this fashion has empowered their team to work more purposefully, uncovering new ways to develop investment strategies.
“Dealpath has cut down on the time we spend on certain tasks and automated others, but it’s also directed our attention to a lot more strategic work,” said Aaron. “The platform has allowed us to do many things we’d never attempt to do otherwise.”
When it comes time for investor reporting, T2’s analysts save the time they’d normally spend sifting through Excel spreadsheets to find relevant data, then curating investor-specific reports. Because these details are already logged, they can easily generate reports that provide either a high-level overview of several funds or an in-depth analysis of just one.
T2 has reimagined how they collaborate internally and externally, while also saving money. After borrowers upload information in Dealpath, the T2 team can review it to ensure its accuracy, then check it off on their due diligence checklist. Beyond simple time savings, this new procedure has also saved both parties the cost of having attorneys on the line to simply review what they’ve received, what’s approved, and what’s outstanding–all of which is easily viewable in Dealpath.
“Dealpath is the database T2 needed to track deals we’re looking at, deals we own, and all of the files, communications, and other details related to them,” said Aaron. “It’s not just a checklist manager, a calendar, or a report builder–it’s all of those things. That Dealpath can accomplish all of that, while simultaneously tracking interest rates on loans, notes from borrowers, and building reports is what makes it the right tool for us.”
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