• Real Assets
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It’s time for real estate investors to recall “the ones that got away”

This article was originally published by the LA Business Journal. To read the original, click here.

 

Active real estate investors have been frantically scouring hundreds of properties online each day and thousands per month, only visiting a select few – because Covid-19 has, of course, wreaked havoc on the typically hands-on profession.

 

So when the pandemic locked the doors on malls, gyms, movie theaters and offices globally as stay-at-home mandates took effect, it became more and more apparent that real estate professionals were left to rely on relationships and historical data to find opportunities and drive swift decision making. Without the ability to examine local markets firsthand, commercial real estate (CRE) investors, of which there are millions, were left to recall sites they’ve visited in the past and the contacts they’ve made.

 

Given the circumstances, if there was ever a good time to revisit “the ones that got away,” it’s now – but how quickly can you find and reevaluate that old deal information?

 

That data – as well as the ability to retrieve it – is immensely valuable. Real estate professionals ideally would have all necessary details at their fingertips, so they could begin contacting investors and brokers for follow-up conversations. Instead, they’re often left digging through emails to resurface relevant contact information, leaving them in the dark on who to call and what to do next.

 

It explains why, as Covid-19 cases continued to surge, global CRE volume plummeted 36 percent year-over-year to $306 billion in the second quarter of 2020, per Deloitte’s 2021 CRE Outlook Report. That, in part, can be explained by the fact that only one-third of respondents agreed or strongly agreed that they have the resources and skills required to operate a digitally transformed business.

 

The most successful firms – of all sizes – acted quickly on their feet to implement a purpose-built CRM platform like DealCloud for their acquisition, development and capital markets teams, as they were tasked with solving a variety of common on-the-ground real estate issues from a remote setting.

 

Unsurprisingly, this is a fast-growing trend in the industry – as Deloitte’s survey shows that 43 percent of CRE firms plan to increase their investment in technology over the next year.

 

Centralized information

 

Real estate firms need a single platform serving capital deployment, relationship management and due diligence, as well as core operational functions. Firms that use multiple third-party software platforms are working inefficiently and wasting valuable employee time. For example, DealCloud solves this common problem by creating a centralized source of truth.

 

Once an investor is actively pursuing a deal, having the property details, photos and documents, as well as the teams’ emails and meeting notes with brokers, lenders, sellers, attorneys, appraisers and third-party consultants, in one database helps real estate teams execute efficiently and ensures no due diligence items, or anything else, falls through the cracks. Plus, the same platform can help track outstanding bids and fund performance over time, allowing firms to gain insight on what’s working and what’s not.

 

Enhanced relationships

 

Modern CRE deal teams not only understand the importance of a deal management system, but also the value of a CRM that tracks all their critical relationships. Key amongst those relationships, from a deal sourcing and origination perspective, is that with their brokers.

 

Deal teams understand which brokers are presenting the best deals and tiers out relationships so teams can be reminded to reach out on a specific cadence. They can track both their firm-to-brokerage business and firm-to-individual broker relationships, allowing them to see the history of their exchanges even if the broker moves on to another firm. This arms them with quantifiable data and the ability to keep those sourcing channels honest by understanding not only how many deals they brought, but how many actually closed and which are yielding the best internal rate of return and equity multiples.

 

Additionally, real estate firms should rely on software for communications between the firm and their limited partners, high-net-worth individuals and other key contacts. The tracking of investor preferences, along with all the communication pertaining to fundraises, distributions, capital calls, fundraises and other activities, can be effortlessly managed, giving firms a complete picture of the relationships driving their business.

 

From a marketing perspective, customized materials like quarterly reports, deal update emails, market update newsletters – and even holiday cards – should all be simply created and updated year-after-year in order to stand out and ensure a steady cadence of quality communications.

 

Local market insight

 

Tapping into local markets from a remote setting is a tall task for anyone, whether you’ve been in the industry for one month or 30 years.

 

Interactive mapping tools make it easier for real estate investors to pinpoint properties on the map and analyze the surrounding area – driving returns across properties in many geographical locations. In addition, you can retrieve a map of any market identifying all the deals you reviewed in the past. From there, it’s helpful to take a deep dive into all asset details.

 

If an investor has never been to a certain city, at the very least they’ll need to get educated on the city’s makeup and history before key meetings, which is why occupancy and demographic data is instilled into the platform – from top, third-party data sources like Preqin, FactSet, PitchBook and S&P Global Market Intelligence – right alongside dashboards outlining the deal pipeline and portfolio.

 

Key real estate-focused dashboards serve as an all-in-one location for the key area development data that real estate investors need to inform investment theses, originate deals and ultimately execute on transactions.

 

Get the support you need

 

In the last year alone, firms across the capital markets industry have undergone years’ worth of technological acceleration and digital transformation. Of course, investors in retail, hospitality and live entertainment facilities have been under great strain, but dealmakers in other sectors still have a ton of dry powder available to deploy, and they need infrastructure for digital collaboration because they can no longer sit in an office and make deals face-to-face.

 

We have seen a plethora of real estate investment trusts (REITs) and real estate fund managers accelerate their tech implementation process to get ahead of the competition – and real estate operators are doing the same to address rent collection, property maintenance and more, seamlessly alongside dealmakers on the platform.

 

As tech adoption increased rapidly in mid-2020, it’s no coincidence that CRE investment rebounded at the year with an 84 percent rise in deal volume in the fourth quarter.