The Institutional Real Estate Inc Sponsorship brochure, Connected-Investor Focused, We connect people, data and insights, sponsorship, events, IREI Products
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NATIONAL ASSOCIATION OF REAL ESTATE INVESTMENT MANAGERS 26 NAREIM DRIVERS WANTED Beginning with the Business Champion, extending to the primary team and beyond, having clear roles and responsibilities, ensuring accountability and appropriate rewards and recognition is essential. This applies equally to a smaller portfolio where the roles may be only part of a job description or a large enterprise with a dedicated team supporting the initiative. The Champion is responsible for maintaining the expectations of the business along with a roadmap of deliverables that provide focus and the opportunity to continuously show value to the organization. Don't jump to the false assumption that because data is involved that IT should be the Champion. Yes, IT will be a critical partner, particularly with regard to data movement and systems implications. However, it is the business that knows what the desired outcome should look like; if the data is reasonable and within accepted norms; and determines the requirements for frequency of update, quality, etc. Accountability includes the acknowledgement that data providers within the organization are now assuming responsibility for maintaining the data to an agreed upon level of quality, completeness and timeliness. Clear ownership of the data at the source is critical and it isn't IT. The challenge is that some of your most highly compensated employees will likely become involved in the process, including asset managers and originators. You shouldn't be surprised by organizational push back as people complain that being a "data entry clerk" interferes with doing their day job. This is where senior leader support for the initiative is a critical element. The organization will need to be reassured of the importance of the initiative, that leadership understands the additional data responsibilities, and that they are committed to optimizing the collection process. Optimizing could include using junior associates, outsourced or off shore resources but regardless, the responsibility for data quality can't be delegated away. Documentation is a critical role that needs to be staffed as a part of the team. Good documentation supports continuity through employee turnover and organizational evolution. Additionally, it provides an audit trail and the basis for future expansion, as well as integration with new systems or portfolios. REVVING THE ENGINE The real fun begins when the basic infrastructure is in place and the initiative has built credibility by successfully delivering. As the organization starts to see the benefits of its new capabilities, they will come to increasingly rely on the new infrastructure and additional requirements are to be expected. By getting data out of drawers, distributed spreadsheets and ad hoc reports into a central environment, the entire organization has a common view of critical business information, eliminating the need for overlapping data collection and maintenance. Beyond this increased efficiency, as multiple periods of data are accumulated, the opportunity to do trend analysis on a portfolio wide basis also becomes possible. Needs change as portfolios grow and what works for a smaller organization/portfolio won't necessarily work for a larger one. As your portfolio grows, the ability to conduct asset-by-asset reviews may no longer be possible. With a reliable data infrastructure in place the ability to do less frequent or exception-based reviews presents itself. This allows your portfolio to continue to grow without a commensurate increase in reporting resources and without losing sight of emerging issues. With the addition of triggers for tolerances of movement (e.g. decrease in cash yield qtr over qtr of more than X%) or absolute values (e.g. loans with LTV > 80% and maturity date < 1 yr), outliers in the portfolio can be identified and the organization can focus on proactively addressing the issues before that unexpected impairment or loan modification is necessary. The combination of robust internal data and the exciting information available from developments in PropTech enable an organization to continuously compare its investments and portfolio to the overall market. With little additional effort, it will be possible to confirm that the investment thesis continues to remain valid and to move analytics from being largely focused on what has happened in the past to enabling dynamic scenario planning for future events. A strong data, reporting and analytic infrastructure can enable reporting efficiencies, improved analytic capabilities and help frame internal investment and portfolio discussions. However, given that commercial real estate remains an investment class with high property idiosyncratic performance, there is no substitute for the sound business judgement of an experienced real estate professional.