The Institutional Real Estate Inc Sponsorship brochure, Connected-Investor Focused, We connect people, data and insights, sponsorship, events, IREI Products
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NAREIM DIALOGUES SPRING 2017 19 Managers who adopt this model can expect to simplify the footprint of their internally maintained operational systems, but they also must address data movement, which is typically accomplished through multiple methods, both formal and informal. Dealing with data movement – and the attendant responsibility of making sure collected data is complete, consistent and accurate – may seem daunting; but the burden is beginning to ease as specialty service providers become increasingly capable of meeting such demands from their clients. In the last five years both services and technologies have emerged to meet the challenge of moving data from external parties to investment managers. RealFoundations' point of view and experience is that the movement of data from external parties to the investment manager will never be a strictly template or technology-based endeavor. Because there are typically a great many different sources of data – each of which use a variety of systems, follow their own procedures, use their own charts of accounts, and use their own data definitions – there are multiple potential points of failure. So, while technology and templates can help with the mechanics of moving data from each source, people – with genuine expertise and an nderstanding of the underlying data – must also be part of the solution. It's people who determine what should be done with the errors that are found, who resolve actual errors by communicating with the property manager or operating partner, and who work with data suppliers to ensure that their data provisioning capabilities are continually improved. Conclusion and Summary Just as no developer would start vertical construction without first ensuring that a solid foundation is in place, so too would we expect any leading investment manager to consider a sound data foundation as mission-critical. Once such a foundation is in place and trusted, the manager has the opportunity to build on it – and to really harness the power and insight that today's technologies promise. Plus, the cost and effort to build a strong data foundation is likely an excellent investment in its own right – given the value of saved time, of making better-informed decisions, and of reducing enterprise risk that tends to be either passively accepted or unrecognized – and is rarely quantified. Since the recovery after the Global Financial Crisis, as cap rates have steadily compressed, steady delivery of returns has been the norm. But this particular party will come to an end, and when it does the successful and differentiated managers will be those who have harnessed the power of their data: to understand risks and opportunities, to squeeze every nickel out of property operations, to quickly and transparently respond to investors' questions, and to adroitly model their portfolios to minimize risk and maximize returns. We know with whom we'd trust our money. John D'Angelo is a managing director with the real estate management consulting firm RealFoundations. John has been in the real estate industry for over 25 years and has spent the last decade focused on serving investment managers in North America.