Real Estate Asset Management - Home Base for Foreign Investors

by : Uwe Falkenberg

Real Estate Investors are currently looking for a "Home Base" in Germany. Without own offices there but substantial property portfolios bought throughout the last months. Property Management on its own does not achieve the investment targets of sustainable development of the portfolio value. A growing number of Investors are looking for experienced partners in Germany. These requirements are met by few internationally experienced Asset Management Service providers in Germany with the local integration needed for a successful support of the investor.

Asset Managers should look at the entire existing and planned portfolio.

1. Cost and Income Structure

Investigation of cost and income structure to identify opportunities for improvement. An example: Active Supply Chain Management, combining the properties in a portfolio and of different portfolios to bundle the buying power in negotiations with suppliers.

2. Investments based on the results of the Due Diligence

Establishing a rolling Investment Budget Plan which is kept up to date with the actual needs. Identification of investments producing a quick win through cost savings and rent increases.

3. Establishing and monitoring the Property Management

Developing a detailed scope of works based on the investment philosophy of the investor to identify and contract appropriate service providers for Property Management.

Main tasks for the Property Manager: Rent collection, contacts with tenants and service providers, maintenance and repairs within the guidelines set by the owner or his Asset Manager.

4. Performance Measurement is vital to our service philosophy:

What you measure is what you get!

Applying a system of Service Level Agreements with Key Performance Indicators for Property Management that include performance reviews and evaluations. We always integrate a performance based element into any service fee, including ours.

Measuring the performance of each property in a portfolio and the entire portfolio against the business is key to informed investor decision. This is reflected in our performance focussed reporting. Also available by the same author: "How to Measure Performance in Real Estate".

5. Reporting

We develop a reporting structure in compliance with the needs of the investor/owner as part of any contract with Property Managers and other service providers. It specifies time and contents of any reporting. A one-page summary report by the Asset Manager is submitted to the owner by e-mail or on an internet based Client Portal and is part of the Executive Dashboard.

Based on the Balanced Score Card philosophy this report contains the current results and performance against the targets agreed. Besides the obvious like rent income, the report should include tenant turnover (as a measurement of the customer focus of the Property Manager), fulfilment of reporting deadlines and financial management and other targets set by the investor.

Sufficient and reliable reporting is of growing importance for lenders. Not only in cases of securisation comprehensive reports on a quarterly basis are required. More information about reporting tools will be announced regularly on the website below.

6. Risk Management

Financial institutions have to perform a risk assessment before any lending. By showing that he has his own risk management in place the investor can actually influence the interest rate positively. Development of an agreed risk matrix with the owner and active management during the operational phase is part of a Comprehensive Asset Management Service.

7. Outline Proposal

As a guideline a generic Outline Proposal is available as a starting point. This will be detailed in each case for each investor and property/portfolio.

For more detailed information about Real Estate Asset Management please visit the website of Berlin Portfolio Ltd or contact the author.