This is the third in our series of targeted insights for investment managers. Whether investment managers and their teams are managing a single asset or an entire portfolio, there are resources available to ensure that data associated with every project aligns with the capital plan. Given the considerable time, effort, and resources required to build robust capital plans, success depends on having credible resources that can provide a single source of truth to measure performance.
the Elusive Single Source of Truth
Forbes recently addressed the commercial real estate industry’s single project-focused, analog tradition, saying,
Historically, CRE intelligence has been passed down from person to person...the future...includes a combination of this human intelligence and technology-based systems."
PropTech facilitates asset-wide or portfolio-wide data and insights digitally, making it easier to distribute and available sooner. Investment managers, rather than concentrating on single projects, focus on asset performance against the capital plan. Technology unleashes new opportunities to forecast more accurately, to allocate funds throughout the asset lifecycle while providing sufficient visibility to course correct when necessary, delivering a single source of truth against which performance can be measured.
Data has always informed decision-making across commercial real estate. In the past, data collection involved collecting and aggregating data from multiple sources, including spreadsheets, email, binders, and even people’s memories. Proptech delivers digital access to real-time and historical information, via one software, creating a single source of truth available to all interested parties.
getting the right information, on time
Successful investment managers, working on behalf of investment partners, grow the value of assets under their control. In an analog environment, a complete “data snapshot” is cobbled together by collecting information from internal and external resources, in a variety of formats. Whether that data is current, or available to all stakeholders without considerable administrative effort, technology enhances their capacity to clear through voluminous information to identify and plan against business-critical initiatives in a timely manner.
When third-party managers have access to integrated systems, they can enter their own up-to-date project data, relying upon the system to aggregate data and serve up insights and reports as appropriate to each user. Leveraging technology, investment managers can focus solely on analysis rather than administrative tasks.
Aided by purpose-built technology, and guided by the capital plan, investment managers ensure that data provided by property and project managers is the right data, aligns with plans, and meets investment partners’ short and long-term goals.
Avoiding Blindspots and Silos
Even when data is delivered in static spreadsheets, technology facilitates data-alignment, minimizing human-error and unnecessary delays in information sharing. Moving data entry, tracking, aggregation, and reporting away from email and spreadsheets and into a centralized repository eliminates the blindspots and breaks down the silos that routinely hobble effective communication.
While all of the resources and tools may not currently be digital, leveraging technology rapidly bridges the gaps, making regular reporting and ad hoc data delivery more effective, internally and externally.
In decentralized or disconnected environments, the difficulty is to establish that all the bases are covered. Eliminate blindspots and fostering transparency encourages free access to necessary information. Establishing repeatable practices ensures consistently better data alignment, and this credibility boosts investor confidence.
focus on performance
When investment managers are relieved of their administrative burden by leveraging purpose-built systems, they can better ensure that the work and the data provided by property and project managers within an asset aligns with the capital plan, as it was created, and as it evolves.
Having credible data provides that “single source of truth,” ensuring that information necessary for data-driven decision-making is tracked, reported, and/or explained, in the case of deviations.
Reforecasting, because data is both current and available, unlocks opportunities to create additional asset value previously unavailable. Investment managers can recommend pulling back on low-priority projects when moving forward on them would increase costs beyond budget variances. Conversely, with access to real-time performance data, cash can be allocated towards additional value-add projects when planned projects are coming in under budget.
Delivering Above Expectations
Armed with the right information, investment managers provide practical guidance, are prepared for the unanticipated and can report in near real-time based upon access to reliable information. In a manner previously unavailable, the capital plan becomes a credible living document that is flexible and responsive.
A well-executed, well-defined capital plan becomes the crystal ball, informing stakeholders how and when to deploy capital to maximize returns. A clear through-line, from underwriting through acquisition to disposition, the plan allows investment managers to operationalize effective, dynamic capital planning, providing the greatest opportunity to achieve long-term success in growing asset value.