asset management disciplines
The role of a real estate asset manager can vary significantly from company to company. At its most basic level, the asset manager is responsible for the financial performance (including both appreciation & current cash flow) of a particular property or group of properties. At a more granular level, there are many factors and disciplines that impact financial performance. Below is a list and brief description of some of the critical disciplines/functions. We will undoubtedly expand on these over time and the strategies involved in each.
Investment Sales – this involves the asset manager working with the investment community and acquisitions team on sourcing relevant deals, preliminary underwriting, due diligence, and full underwriting/budgeting as well as the preparation of the asset plan. At the other end of the spectrum, the asset manager will be involved in the decision to sell assets. refinance them, etc.
Accounting/Finance – the asset manager frequently interacts with the accounting and finance team, in terms of budgeting, reporting, distribution analysis, and coordination with lenders/investors.
Lender & Investor Relations – the asset manager is frequently involved in both lender and investor relations – from initial sourcing and arranging for financing. Management of the ongoing relationship includes reporting, compliance, and debt service or distribution management as the case may be.
Leasing – leasing is a critical aspect of the strategic plan, and the asset manager will work very closely with the leasing team – whether internal or 3rd party. This includes agreeing on marketing strategy, deal targets and terms, and negotiations or approval of key business terms in the lease.
Operations & Construction – this encompasses property management and construction (focusing on capital and tenant improvements). Property management has become more complex and adds significant value to the asset when performed as best in class. Property management has the most direct impact on expenses; however, with the increase of services and amenities at properties, property management is also critical for driving tenant retention. The asset manager has to work very closely with the property management team to deliver this aspect of the strategy.
Legal – real estate is a transaction heavy industry. Asset managers have to work closely with counsel during multiple phases of the property ownership cycle – purchase and sales agreements, legal due diligence, leases, major service and construction contracts, and dispute resolution. A vital part of the asset manager’s role is to communicate and drive the business points during each process effectively.
Risk Management – insurance is a critical component of owning and managing properties. Many lenders dictate minimum insurance requirements. However, the owner has to make sure that a property is adequately insured based on its unique circumstances. Additionally, one must confirm that those utilizing the property – tenants and vendors are adequately insured. Risk management involves more than just insurance and is often coordinated with legal, in terms of making sure proper indemnities and liability transfer mechanisms are in place, and that management is using appropriate safety procedures.
The above is just a brief outline. We will provide a more thorough review of these different aspects and dig deeper into critical strategies. We welcome any feedback in terms of areas or strategies to cover.
This article is for general information, educational, and entertainment purposes only. Establishing and implementing a strategy for a particular property encompasses many unique factors, and professional advice/services should be sought for that specific transaction or investment.