Commercial real estate asset management can be a huge advantage to private investors but it’s also a bit misunderstood, even within industry. Part of the confusion lies in the fact that different companies, institutions and funds utilize asset management in a variety of ways depending upon their leadership structure, vertical integrations and reporting standards. Asset managers can be more hands on with overlapping duties with property management or completely hands off on property management, solely focusing on analytics and reporting. To avoid confusion we will break down the different types of private asset management and their overall functions.
Operational Approach. Operational asset managers spend a larger amount of time coordinating different members of the management team. Their duties fall more in line with a “boots on the ground” approach, sometimes blurring the line between asset and property management. Hands-on oversight of the property managers, project managers, leasing agents, and other human capital are a big part of the process here and help drive more the tactical aspects of the properties in a portfolio
Analytical Approach. The analytical asset managers are usually reserved more for REITs, private equity and institutional players as they typically have more financial reporting requirements. These asset managers have more of a role looking at financial and market data for quarterly reporting, taking numbers from outside sources and making more strategic decisions for the portfolio. These asset managers don’t typically have a large part in the day to day operations and will coordinate with property managers more for budgeting variances and leasing.
Transactional Approach. Transactional asset managers are heavy on the acquisition and disposition side, interacting heavily with the brokerage community and driving growth within the assigned portfolio. These managers are deal driven, using some analytics and market data to identify strategic acquisitions and dispose of properties that have completed their investment cycle. These managers may interact with property managers, but there is more of an overlap with the portfolio side.
Comprehensive Approach. The comprehensive approach is a mosh pit of all of these approaches and is often seen in smaller private equity shops and among private individual and family investors. They oversee on-site operations, provide financial and market data, assist in leasing and NOI growth and expand portfolios following the overarching business plan. These asset managers require a strong background in a lot of experiences such as property management, brokerage, private equity, and debt, among others. Typically private investors need comprehensive asset management due to a lack of an integrated management team and limited resources compared to public and institutional players. Comprehensive asset managers will report financials, market analysis, budget variances, oversee the leasing and property management teams, and assist in strategic acquisitions to drive portfolio growth for individuals. This is not an exhaustive list.
To summarize, asset management can take on many different forms depending upon the structure and needs of the investment team. Duckridge Realty Advisors offers comprehensive asset management and tailored solutions to your needs. Contact us for more information.