The Makings of a Good Asset Manager – Have you heard the story about an 18-wheeler getting stuck under an overpass? It was too tall for the stated clearance and became wedged in between the concrete sections above and below it. The best teams of ‘experts’ racked their brains on how to get the truck loose. These experts and other industry professionals were seriously perplexed. They simply could not figure out a way to free the rig without creating significant additional damage to the structure and the vehicle. It was a little girl who finally came along and suggested they let some of the air out of the tires. This lowered the truck…problem solved. No further damage.
I wish I could say that most of the challenges we face here at National Asset Services [NAS] are as easily solved. This is not the case. In commercial real estate, we deal with issues that are typically unique, complex and interrelated with others, so that what may be perceived as simple often has tremendous ramifications. This is the reason why our investors seek us out. First, we have experience, but we also value the input and the experience of our investors as well.
Full transparency is not something we say, it is something we practice.
As many have heard me say, our investors have worked hard for their money and it now must continue to work hard for them! Our goal is to:
- Maximize the return to the investors, and
- Maximize property value
We have found that vague goals lead to lack luster performance. Specific goals tend to chart a course of direction that is more easily and effectively followed, leading us back to our ultimate goals and maximization of return to investors and property value. We believe that results-focused goals measure the outcome and not the activity. The activities are the strategies by which you achieve the goal. Achievement of that goal is the desired result.
Goals must be linked to time frames, which create a practical sense of urgency. The tension created between where we are versus where we need becomes a driving force. This ongoing tension is a fuel which can and should feed the activities and thus ultimately bring about the desired changes.
As a good asset manager, we must work consistently to prevent the erosion of NOI. The return to the investors is created by increasing revenues, reducing expenses and creating goodwill. Each property has its own paths to achieve this and the property managers for these assets are the critical piece to this metric. They need to be managed in a collaborative manner. It is a team that creates the momentum, sets the tone and gets the job done collectively.
Maximizing the value of any real estate asset involves a lot of constantly moving parts. Maximizing both property value and short-term returns to investors do not always work in conjunction with one another. That is not to say that they cannot work in tandem with one another, as they often do. It is not, however, automatic. One must consider the hold/sell timeline, tenant mix, operational needs and trends, sensitivity to the sub-market and more. The biggest reason to always be mindful of keeping the property value maximized [and knowing what that value is] is knowing just exactly when to execute the exit strategy. Investors make their money at acquisition when they buy “right” and they realize the wisdom of that investment when they monetize it at the exit.