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
REAL ESTATE INFORMATION MANAGEMENT - Insight, Analytics, Artificial Intelligence and More - 2/4/2020
Data runs almost every aspect of our lives. Making good business decisions as a real estate organization, whether on a small scale or for an enterprise-wide initiative, requires an ever-deeper understanding of individual assets, portfolios and shifting markets. In order to gain this level of information insight in today's complex, connected world, a sound data strategy based on a high-performance blend of business intelligence, analytics and data science, must be set. This webinar will review best practices on developing a comprehensive data architecture, the integration of internal and external data sources, advanced analytics, and how Artificial Intelligence and Machine Learning can be applied to these processes. Case studies of Real Estate Companies who leverage data successfully to gain actionable insights will be presented.
Chuck Niswonger has over 30 years of successful leadership experience in technology-related roles that range from operating his own consulting company (www.nicenets.com) to directing the IT strategy of a real estate investment management firm to manufacturing and technology-enabled education. Chuck has also been the chair of the Realcomm Investment Management (IM) Advisory Council for the last ten years, managing content selection for the conference educational sessions, IM forums, workshops and webinars.
Julien Ragbeer is a Data Scientist/Engineer in the IT group of Oxford Properties. He is responsible for some of the machine learning based applications in production, analysis of data workflows and pipelines and proposing the use of scalable and innovative solutions that align with business needs. Julien is a proponent of open source software and initiatives.
Rudy Reagin is the Global Programme Lead for Deutsche Bank's Corporate Services. With more than thirty years of experience in IT, Rudy is currently responsible for the application architecture that supports lease administration, facilities management, space management, security operations, and a wide range of business services. In recent years, Rudy has driven a data warehousing and BI project that successfully integrates information from a range of sources to facilitate performance monitoring and decision support.
Kevin is the Chief Operating Officer of NavigatorCRE and oversees global enterprise engagement.Prior to joining Navigator, Kevin’s 16-year career includes positions at Deloitte, EY, and Morgan Stanley. Most recently he served as a Global Technology Strategy Lead at Deloitte, advising real estate developers, operators, and investors, with clients across 4 continents. Kevin is recognized as one of the leading commercial real estate tech executives in the industry and a noted speaker, author and blogger within the growing Proptech sector. He has spoken at conferences around the world on next generation real estate technologies like Machine Learning, Cognitive Automation, and Blockchain.
Andy Birch is an experienced business software professional with a unique blend of marketing, technical, industry, product and sales expertise. Proven success in delivering sales and marketing programs that achieve game-changing results. Particularly strong at taking complex issues and turning them into understandable value propositions for customers and partners.
With over 25 years industry experience, Brett Sample joined Tango in 2014 and has led the effort to design and create the company’s cutting-edge Space Management application. Prior to joining Tango, Brett worked for many of the major IWMS, CAFM and CMMS providers in the market and started SpacePlanFM. At SpacePlanFM Brett provided consulting, implementation and support to clients in over 40 countries and implemented over 200M Square Feet of Space, Facilities and Lease Management.