Outsourcing Key Functions Allows Funds Sponsor to Control Costs and Staffing, Leverage Realogic’s CRE Expertise

Business Challenge

The sponsor of multiple private equity funds, collectively invested in 70+ office properties, engaged Realogic’s Workforce as a Service team to assist with several essential commercial real estate services:

  • Creation of an Excel-based fund platform to analyze the performance of individual commercial properties, consolidated portfolios, and partnership structures and returns.
  • Assisting the acquisitions team with financial modeling and analysis of potential acquisitions.
  • Performing monthly updates of Argus files for updated contractual and speculative leasing.
  • Additional analytical projects to assist executive, property, and asset management.

Excel Fund Platform

Realogic developed an Excel-based fund platform to analyze the performance of individual properties, consolidated portfolios of properties, and fund and partnership returns. The property-level analysis allowed the client to analyze financial performance in a variety of ways:

  • Cash flow reporting on a monthly, quarterly, and annual basis.
  • Financial performance measures, including leveraged and unleveraged rates of return, ROI, and cash-on-cash returns.
  • Operational performance measures, including occupancy and tenant retention statistics, future lease expirations, and leasing cost analysis.
  • Valuation reporting based upon cap rate, discount rate, and hold period assumptions.

Fund and partnership analysis provided for analyses of portfolio-level debt, loan amortization, partner’s capital, reinvestment proceeds, limited and general partner returns, and general partner fees. Furthermore, the Excel models allowed for the importation of actual historical data from client’s property accounting system and projected data from Argus DCF.

Commercial Real Estate Acquisitions

Realogic built for our client a custom Excel-based acquisitions model to analyze new investment opportunities. In addition, Realogic’s analysts worked closely with the client’s acquisition team to model potential new acquisitions and run various pricing and assumption scenarios.

Argus Modeling

Realogic initially built full Argus models for each asset in the portfolio and updated them on a monthly, quarterly, and annual basis. For monthly updates Realogic read all new leases, lease amendments, and licenses that were executed during the month and then updated the Argus models as needed.

Furthermore, Realogic updated the models for any new speculative leasing as provided by asset management. Each quarter the Argus models received further updates to capital, miscellaneous income, and expenses to include actual amounts for the quarter and any forecasted figures for the remainder of the year as provided by property and asset management.

Finally, each year the market assumptions received a full update to account for changing dynamics in each asset’s particular market area.

Additional Commercial Real Estate Projects

Realogic was asked to perform numerous special projects ranging from supplementing the client’s lease administration team, abstracting leases, modeling various upside/downside and buy/hold/sell scenarios, assisting with annual property budgets, and other reporting requirements.

Results

Outsourcing essential commercial real estate functions to Realogic allowed our client to maintain a small staff, control costs, and complete large projects on time while leveraging Realogic’s commercial real estate skills, experience and expertise.

“We initially hired Realogic to build our Excel platform. However, that one project led to us hiring Realogic to supplement our staff in countless additional ways over the years. With Realogic, we worked with a team that we implicitly trusted and saved lots of time and money on training new analysts and associates which allowed us to focus on our key objectives, which were managing our properties and investor relations.”—SVP of Asset Management

Learn More

If you’d like to learn more about financial modeling for commercial real estate, there are two posts in our blog that may interest you.

One, written by our CEO Jim Pettinger, shares one simple tip for dramatically improving your commercial real estate Excel models.

The second, on Argus Enterprise best practices, is on reviewing market rent inflation in AE models.

If you’d like to learn more about Realogic’s Workforce as a Service options, visit the WaaS page on our website.

Or, to learn more about our financial modeling services for commercial real estate, including modeling in Excel or Argus Enterprise, visit the financial modeling page on our website.