Is your company one of the nearly 80% of commercial real estate companies that use spreadsheets and disconnected systems for asset management?
With dozens of metrics to measure, trying to make quick meaningful sense of your real estate portfolio is difficult. Tracking asset performance is a time-consuming and aggravating task without the right tools, so if you have experienced this, you are not alone!
It’s no wonder global real estate investors struggle to find actionable suggestions from their data. Worldwide, 30% of commercial real estate asset managers rely only on spreadsheets such as Excel for asset management. Yet, another 48% depend on disconnected property management and accounting systems. Consequently, this leads to data that is siloed between programs or spreadsheets. This siloed data prevents real estate investors from making important connections and looking at the overall picture. Most notably, this results in missing out on critical insights that are only available by looking at your business or organization through a connected system. Lastly, there is always the risk of introducing your own calculation error. Have you experienced any of this yourself?
Data is Everywhere, Yet Hard to Access
There is more data to look at all the time, and the sheer volume of data “continues to double every three years,” according to the McKinsey Global Institute. Without the ability to aggregate and analyze data, 78% of real estate professionals are unable to make informed decisions based on key metrics, so this means investors are working in the dark. Furthermore, commercial real estate asset managers are unable to see into their operations or benchmark their portfolio’s performance. Part of this difficulty stems from the quick-moving nature of real estate. There is always something pressing that needs to be done. Unfortunately, it takes knowledgeable staff to collect, reassemble, and interpret data. And, not every organization has the resources for this critical yet tedious task necessary in asset management.
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Often, we find companies are not using a standardized process to manage their portfolio. It’s nearly impossible to draw reliable conclusions if critical processes are not in place. Seeing all the data together helps locate the issues. Additionally, analytics can help consolidate information so weak areas that need your attention are easier to identify.
Understanding when you are not operating on the budget is extremely helpful. If rents are generally paid on time, you might not notice without analytics, that the rent paid is lower than the lease terms. Common area maintenance (CAM) is another common pain point. Simply put, as the asset manager, continually missing your projections causes tension with tenants. Coming up with a large sum of money at the beginning of the year to reconcile the difference is not easy for many tenants. Analytics can be used to quickly uncover when expenses are off track. This information can then be used to take action.
Real estate management firms need to adopt new tools and processes to move towards this level of data-driven portfolio asset management. With insights provided by analytics, real estate professionals can make proactive rather than reactive decisions. The ability to stay ahead of declining or flat performance means you can strengthen your portfolio’s financial standing more quickly and accurately.
Investing in an analytics-based solution has quantifiable rewards: Nucleus Research completed a study across multiple industries and found that for every dollar a company spent on analytics, it received an average return on investment of $13 dollars.
STRATAFOLIO: A New Way for Asset Management
STRATAFOLIO is a software solution for investors that provides them with the confidence to greenlight expansion plans. Or, equally important, capture strategic cost reductions. The concept for a portfolio asset management product was borne out of our own needs as real estate investors. We understand the desire to make every dollar go as far as possible.
Many industries have adopted management type systems. In particular, building automation has already established itself as a game changer with smart HVAC sensors, lighting controls, and security cameras. With this system comes diagnostic analytics. Diagnostic analytics has the power to monitor performance fluctuations and diagnose issues before they turn into failures. The end result is both energy and maintenance savings. Those same capabilities can be leveraged to provide a portfolio-wide snapshot of your investments. Descriptive analytics delve into data from a given timeframe to create a baseline comparison of future trends. These insights commonly measure loan-to-value (LTV), debt coverage ratio (DCR), and return on investment (ROI) to name just a few metrics!
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Your Dashboard for the Future
Our intuitively designed dashboard integrates data from your existing property management and accounting system. Access your portfolio data at any time, from anywhere. So, no chasing down your staff for numbers, and no wasting time trying to make sense of it all.
Now, you can use the dashboard to see all your key operating and financial metrics. These include occupancy, mortgage summary, common area maintenance, cash flow, monthly rental income, return on equity, capitalization rate, and net operating income. Additionally, you can run different scenarios to forecast your portfolio’s standing. For example, you might look at the impact of losing an anchor tenant or increasing payments on your mortgage principal.
With the ability to filter many data points, you can analyze your portfolio from the highest level to the smallest component. And, you can do this no matter what the asset type is you are analyzing. Knowing what investment strategy is working well is just as important as understanding which one is not. What comes next is an even more exciting piece of the picture, which is predictive analytics. Any time a software suggests something for you, it is using predictive analytics. Essentially, predictive analytics help predicts how things might happen so you can minimize your risk.
Want to be a Part of Something Exciting?
STRATAFOLIO has been working with some talented companies already. For a limited time, we are offering a unique opportunity. Are you wanting to take your business to the next level? Are looking for just the right tool to help you? Join our beta program and be part of the refinement of this robust asset management tool. We are looking for real estate leaders, or REIT managers who develop, construct and/or manage commercial real estate assets. Sign up today at stratafolio.com or email us at [email protected] to find out more. Join us as we change the future of real estate management.
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