Property software company Yardi’s investment management industry principal Chris Barbier has a few insights to share.
Ownership vehicles for commercial real estate investments include partnerships, closed-end and open- ended funds, REITs and more.
He says investors in these not only want more information, they want easier access to it.
That requires the assimilation and distribution of financial and operational data, from the portfolio level to operational aspects of individual properties.
“Advanced software solutions can perform these and many other operations efficiently and drive better decision-making for investors,” Barbier says.
Regardless of the myriad of complex structures, tax considerations and rules that apply to any particular investment vehicle, investors’ priorities remain constant: optimised returns, timely capital allocations, consistent communication across the investment lifecycle, and accurate determination of distributions, he says.
“What’s changing is how those priorities are being met.”
Elevated investor expectations parallel advances in technology as paper reports, back-and-forth emails and spreadsheets are superseded by the online and remote convenience that real estate investors experience in other aspects of their daily lives.
Barbier says existing and prospective investors follow their real estate investments’ value and income production more closely than in previous eras.
Those elements include a property’s day-today operational elements like rental income, leasing activity, marketing and capital improvements. “Investor reporting used to be primarily confined to financial performance.”
He says a single connected investment management platform is the technology of choice for many real estate investment managers because it creates one ‘source of the truth’ for real estate asset operational and financial data, giving investors clarity into their holdings and helping to identify risks.
Such systems can assimilate all property prospecting, preliminary underwriting, rent and expense data, loan abstracts, maturing debt by property and owner, asset ratings, valuation tracking, occupancy trends and more.
“Compiling the data into market analyses and automating electronic distributions are also simplified when operational and investment systems are connected,” says Barbier.
“End- to-end investment platforms also help investors evaluate their best-performing properties against target properties, see where rents and expenses exceed the comp set, tie capital calls to investment lifecycle data, access quarterly reports, and understand how a given asset will impact their overall investment allocations.”
According to Barbier most best-of-breed solutions can’t manage an investment asset through its lifecycle, which begins with identifying the opportunity and continues long after the deal closes.
An integrated technology platform, by contrast, continuously collects data related to facilities maintenance, construction options, energy consumption and other operational details that impact asset value.
“This generates a vast pool of data for evaluating an asset over a years-long investment lifecycle,” he says.
The result is faster, better-informed investor decisions.