NATIONAL ASSOCIATION OF REAL ESTATE INVESTMENT MANAGERS
22
NAREIM
At the same time, a star rating that suggests the property
is healthy means the asset manager can move on to
more pressing issues rather than spend time interpreting
metrics. You're freed up to add value elsewhere.
GAINING COMPLETE CONTROL OF ASSESSING
HEALTH OF A PORTFOLIO OR ASSET
What makes the methodology stand out is that the asset
managers control the scoring parameters rather than
relying on pre-established KPIs. Asset managers know
their portfolios and investment strategies, so they know
how to score them.
The key to successful scoring is selecting relevant KPIs,
and establishing the sensitivity of the ratings to each.
You might have a different set of criteria for a core
portfolio versus an opportunistic portfolio, where different
strategies focus on different KPIs.
Also, establishing the desired KPIs to be scored each
month allows investments to be ranked, adding a new
dimension to the conversation and promoting deeper
discussion of what's working or not working from an
asset management perspective.
For years, real estate asset managers have known what
metrics drive performance and how to calculate them.
But technology is helping to push to a higher level the
ability to see the bigger picture.
The technology ultimately complements the investment
manager's well-educated approach to portfolio and asset
management. A star scoring approach doesn't take the
expertise out of the manager's hands but provides added
insight for making the best decision about strategic
direction. It's all about decision support: recognizing
problems as early as possible, starting the conversation,
and taking action..
And that's a star-studded benefit to any asset manager
and investment management professional.
