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Operational Phase
Our focus is on Asset Management or an even more
extensive Portfolio Management which we provide Germany
wide. The Asset Manager utilises the Property and Facility
Management to drive the value of the investments.
The objective is to ensure or exceed calculated yields while
increasing the capital value. This is a delicate balance as
value improvements may effect the immediate yields. Therefore it
is key to establish the investment philisophy at the outset, e.g.
through interviews with the stakeholders of the investor.
Asset Management
As Asset Managers we look at the entire existing
portfolio with regard to any planned portfolio changes.
1 Operational Cost and Income Structure
We investigate the cost and income structure to identify
opportunities for improvement. This can be active Supply Chain
Management, combining the entire portfolio and in the next step
bundling the buying power of different portfolios we manage in
negotiations with suppliers.
2. Capital Expenses Based on the results of the Due Diligence
We establish a rolling Capex Budget Plan which is kept up to
date with the actual needs. We identify those investments that
might bring a quick win through improvement of the rental
situation.
3. Organising and Supervising the Property Management
Based on a detailed scope of works we develop based on the
investment philosophy of the investor, we help to identify and
contract appropriate service providers for Property Management.
Main tasks for the Property Manager is rent collection, dealing
with tenants and service providers, maintenance and repairs
within the framework set by the owner or his Asset Manager.
4. Performance Measurement is key to our service philosophy:
What you measure is what you get!
We have developed a
system of
Service Level Agreements with
Key Performance
Indicators (KPI) for Property Management including performance reviews
and evaluations. We always incorporate a performance based element into any
management fee, including our own. For an example item for an
SLA go to the
end of this page.
There is also the
aspect of measuring the performance of each property in a
portfolio and the entire portfolio against the business plan at the outset. This aspect is reflected in our performance focussed
reporting.
5. Reporting in compliance with the needs of the investor/owner
We develop a reporting structure and make this part of any
contract with Property Managers and/or Facility Managers. It
defines time and contents of any regular or ad hoc reports. A
summary report by the Asset Manager is available to the owner on
an internet based Client Portal and is the
Executive
Dashboard.
Applying the
Balanced Scorecard philosophy this report contains the actual
data and performance against agreed targets. Besides the obvious
like rental income, this might include tenant turnover (as a
measurement of the customer care by the Property Manager), the
meeting of reporting deadlines and financial management and
other goals that are important to the investor.
Operational reporting is also of growing importance for lenders. Not only in cases of securisations
extensive quarterly reports are required.
6. Risk Management Because financial institutions have to
perform a risk assessment before any lending, if the investor
can show that he has his own risk management in place it will
influence the interest rate positively. We establish and agree a
risk matrix with the owner and actively manage it during the
operational phase.
7. Outline Proposal
as a guideline we have prepared a generic
Outline Proposal which will be detailed in each case for each
investor and Property.
For more information about Asset Management and the Outline
Proposal please make your request through the
Feedback page.
2.
Property Management
Main tasks for the Property Manager is rent collection, dealing
with tenants and service providers, maintenance and repairs
within the framework set by the owner or his Asset Manger. We
provide the procurement process to contract Property Management
which meets the client's specific needs and produces synergies
and savings.
3.
Facility Management
Facility Management is one of our main consultancy areas. We
have introduced Service Level Agreement based contracts for
Facility Management into the German Market. We use this detailed
market knowledge as leverage in negotiations with service
providers. Through intelligent bundling of services we have
achieved significant savings with improved client satisfaction
for both the owner and the tenant.
For translations of the German terminology an investor will
inevitabnly come across in this process please refer to our
Glossary of German Property terms and abreveations
on this website.
Service Level Agreements in Real Estate Asset Management
Performance
measurement is key to a successful service philosophy:
What you measure is what you get!
We have developed a
system of Service Level Agreements (SLA) with Key
Performance Indicators (KPI) for Property Management and
other property related services like facility management. A
vital part for the system is the inclusion of performance
reviews and evaluations. We always incorporate a performance
based element into any management or service fee.
In order to be able
to measure results these results have to be defined and just
as important a measurable unit has to be associated to it to
determine the fulfilment of degree of fulfilment of the
desired results.
An example:
You want correct and timely reporting because that is
also what your bank or your shareholders expect from
you. So you have to define what the content of the
report has to be. This would be your very rough service
level for “reporting” in your service level agreement.
The next steps are the measurements for the delivery of
the results (key performance indicators, KPI): There
should be no errors in the report. The report for the
previous month should be delivered to your e-mail or
uploaded on a reporting portal at the latest by the 10th
of the following month and in hard copy 2 days later.
But of course
this is only half the job. Thanks to the KPIs you can
measure the fulfilment: Number of errors and days of
delivery after the 10th of the following
month. Now you have to define the consequences of this
non-compliance. This is done by attributing points to
the various KPIs, say per error 10 points reduction and
per day of delay another 20 points. If the amount of
points reaches a certain level there will be
fee-reductions. If it becomes unbearable you have
measurable results as grounds for a contract
termination, a very strong argument should there be a
discussion or even legal action.
These service level
agreements and key performance indicators are very powerful
instruments for managing the performance of your property
portfolio and services generally. They should not be seen
and used as a means of fee reduction after signing a
contract. Actually you want to pay the full fee agreed
because then you know that everybody is performing as they
should. The setting of the points for the KPIs requires some
skill and a clear strategy of what you want to achieve. By
giving certain areas like renting of sales support special
weight you set the points high. This will be a strong
motivator for your property manager or asset manager to
perform especially well in these areas as there is a likely
punishment for failure. This aligns the actions of your
service providers with your goals.
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