2020 Vision: Finding Good Investments
Global institutional investors are expected to allocate $80-$120 billion of capital to real estate over the coming years, according to Hodes Weill & Associates and Cornell University’s Baker Program in Real Estate. The real challenge lies in getting the most from that capital. As 2020 beckons, the time is right to examine how investments will be made next year and beyond and how investors can identify and profitably execute investment opportunities.
So where are the good deals? Probably not in foreclosed homes, which have been assimilated into a single family homes asset class and, in many cases, capitalized in the public market as new REITs. The cap rates for multifamily assets have reached a level that makes construction and redevelopment the only option for a reasonable internal rate of return. And commercial logistics and urban office assets appear to be tapped out.
What should investors with dry powder do: stand pat until the next downturn or stay in the game? How can private equity real estate serve investors’ best interests in this environment?
Data compilation, analysis are key
The answer lies in compiling and analyzing everything that comprises investment opportunities. This includes rent and expense data, loan abstracts, maturing debt by property and owner, asset ratings and sales data as well as valuation tracking and occupancy trends. Digesting the proliferation of data to find optimal asset acquisition, renovation and sales opportunities requires advanced technology capable of processing information from all market sources.
Many real estate advisors are turning to advanced software suites for business development and customer relationship management. Such systems can assimilate all property prospecting, preliminary underwriting and asset management information within a single platform. From that data comes market analysis and reports, including metropolitan statistical area trends that identify macro issues essential to positive results.
This information makes it easy for real estate fund managers to evaluate pipelines and match deals with investors. They can also:
- Identify gaps between best-performing properties in a sub-region and their target properties
- Uncover properties with rents and expenses that exceed the comp set
- Tie capital calls to investment lifecycle data
- Auto-generate quarterly investor reports
- Gauge an asset’s impact on the overall allocation of the fund, asset type threshold and investment strategy
Property-level performance drives value
This kind of technology can additionally enhance asset value by driving new efficiency into property-level operations. For example, enabling online payments through a resident or tenant portal can reduce open accounts receivable. Energy management systems can reduce the cost of operating heating, air conditioning and ventilation systems without impacting tenant comfort. Automated construction management keep projects on time and on budget with real-time views of data across multiple capital projects. Coordinating all leasing processes and market intelligence activities can increase revenues with quicker deal execution.
In short, automated compilation of fund, property and tenant information in a single system delivers a competitive edge and drives faster, better-informed investment decisions.
Success in 2020 and beyond might entail doing more with fewer opportunities. That makes it more important than ever to leverage technology capable of synthesizing data. Investment managers are wise to consider adopting tools that help track deals efficiently, identify opportunities quickly, enable confident acquisition, redevelopment and disposition decision - and bring capital from the sidelines to the field, where the real players are.
This Week’s Sponsor
Yardi® develops and supports industry-leading investment and property management software for all types and sizes of real estate companies. Established in 1984, Yardi is based in Santa Barbara, Calif., and serves clients worldwide. For more information on how Yardi is Energized for Tomorrow, visit yardi.com.
UPCOMING REALCOMM WEBINARS
Top GLOBAL INNOVATIONS Impacting Commercial and Corporate Real Estate - 12/12/2019
2020 will likely be another year of great innovations for the Commercial and Corporate Real Estate industry. With a multitude of new companies and ideas being funded by an insatiable appetite of investors, the traditional workflows and processes of Real Estate are challenged daily. Add to this a desire by the established marketplace to also innovate and the pressure of change increases. This webinar will bring together some of the industry’s most prolific prognosticators who will discuss and debate the state of innovation in our industry. For those firms that are leaning into the change brought about by technology this is a perfect opportunity to hear about the leading solutions, case studies and best practices.
Founder of Realcomm Conference Group, an education organization that produces Realcomm, IBcon and CoRE Tech, the world's leading conferences on technology, automated business solutions, intelligent buildings and energy efficiency for the commercial and corporate real estate industry. As CEO, Jim interacts with some of the largest companies globally pertaining to some of the most advanced and progressive next generation real estate projects under development.
Jeff Chulick is the Technology and Innovation Leader for EY Real Estate Services. He leads a global team of professionals focused on the identification, innovation, design and realization of technology solutions that greatly enhance the workplace experience. His areas of focus include digital strategy, smart workplace, IoT, visual communications, workplace management, physical access and audio/visual technology. Jeff has over 20 years of enabling workplace strategies and delivering innovative solutions for EY and external clients across many different industries.
Marc is a pioneer in leading the Intelligent/Smart Buildings and M2M movements pushing the industry forward and has contributed to transforming and changing the Intelligent Buildings and M2M (now IoT) industries. As Chief Marketing and Communications Officer for Lynxspring Marc leads corporate and product marketing, strategy, brand management, public relations and communications that support the company’s strategic and growth initiatives.
Craig Stevenson is President of AUROS Group, a technology company based in Pittsburgh, PA. He is widely known for his role in establishing Pittsburgh as a leader in "Evidence-based Performance" for the built environment. Evidence-based Performance uses technology to bridge the gap between "hoping" a building is performing as designed to "knowing" a building is meeting its performance goals. He is credentialed in virtually all known building performance standards. As a result, Craig focuses solely on owner's performance requirements for their building(s).
John Dulin is a 30-year global telecom and enterprise executive and has held senior positions in product management, marketing and sales in the areas of fiber optics, wireless and new technology development. Currently with Corning, John is focused on introducing its fiber optic and wireless innovations to the commercial real estate market.
As Chief Innovation Officer, Jeff Clark leads the development and delivery of new offerings at RF Connect, properly positioning the company and our clients for the critical trends of technology convergence that define our era in telecommunications. Since joining RF Connect in 2016, he has introduced our software-defined wide area mesh network that provides industry-leading monitoring and LTE transport connectivity for RF Connect’s clients nationwide. Jeff also champions RF Connect’s bold entry into the private LTE segment.