NEW YORK, June 29, 2021 (GLOBE NEWSWIRE) – Interest in outsourcing certain investment management functions is growing among real estate investors and investment managers of all sizes, with most planning to outsource at least some of their functions. primarily due to increased pressure. from its limited liability partners (“LP”) and rising technology-related costs, according to new research from Wealth Management in Real Estate and Informa Engage on behalf of Real Estate Solutions Practice at FTI Consulting, Inc. (NYSE:FCN)…
According to Commercial real estate outsourcing and investment…
Josh Herrencol, Senior Managing Director and Head of Real Estate Business Transformation Services at FTI Consulting, noted that over the past decade, outsourcing to the commercial real estate sector has been a more artisanal industry focused primarily on non-strategic functions, but this is changing.
“The general perception of outsourcing in the real estate investment community has gradually changed from commodity to value added,” said Mr. Herrenkol. “This is in part due to the availability of more attractive real estate service provider options today that can help investors improve efficiency and improve processes. Modern solutions enable organizations to scale, automate systems and aggregate data without investing heavily in new infrastructure. ”
Among those already outsourcing, the three most influential factors when choosing a fund administrator are experience with similar funds and / or portfolios (47%), customer service / relationship management (40%), and experience with real estate (37 %). %).
Josh Wilcox, managing director Investment management and reporting The services offered by FTI Consulting added: “Managers want to truly benefit from outsourcing by having access to organizations that understand real estate, have real subject matter experts, and have dedicated real estate technology. The advent of the real estate industry – or PropTech – has only heightened this desire. “
Companies are now thinking more strategically about outsourcing, looking for solutions that will help them better manage their investment portfolios or attract more LP through greater transparency of performance at the asset level. For example, 80% of LP survey participants believe it is important to some extent that the fund manager / general partner (“GP”) uses a third party administrator. Likewise, 86% of LP respondents believe it is important to some extent that third-party administrators have asset-level independence from providers.
Other key findings Commercial real estate outsourcing and investment the survey includes:
- 83% of respondents using outsourcing believe that it is beneficial for a fund administrator to provide complex tax services.
- 75% of respondents who are currently outsourcing consider independent oversight of other third-party vendors, especially at the asset level, to be “very important” or “critical”.
- 56% of respondents who already work on the side are considering outsourcing additional functions.
- The importance of their companies owning the technology stack varied among respondents: 41% said it was very important and 37% said it was not that important.
- Pricing (49%) was the most influential criterion among respondents who had never been outsourced, followed by real estate expertise (45%) and technology solutions and capabilities (41%). Only 17% cited integrated services, customer service / relationship management, and cultural relevance as the most important criteria.
Participants who do not outsource any functions were asked about the quality of past outsourcing experience and constraints. Among these respondents, 27% said they did not find a suitable partner, and 25% said that management or external stakeholders consider this a key and strategic function. Of investors not currently outsourced, 74% are considering switching to outsourcing within the next two years, reflecting a potential shift in attitudes towards third-party service providers.
“As some executives are hesitant to relinquish control over outsourced functions, finding a partner they can trust and considering expanding the organization, especially those with real estate expertise and technological capabilities, can lead to more positive outcomes. “Said Mr. Wilcox. said. “By outsourcing to partners with experience with different real estate fund structures and types of property, it is easier for companies to trust the work that their partners are doing.”
Mr. Herrenkol added: “We expect institutional real estate investors, perhaps by encouraging their investors, to increasingly focus on their strategic investment and asset management imperative and leave other functions to third parties who in turn take over. into consideration. be their strategic imperative. “
About the survey
A number of commercial real estate investors including institutions, pension funds, public and private REITs, sovereign wealth funds, investment managers and private equity firms attended the event. Commercial real estate outsourcing and investment survey from February 5 to March 4, 2021. Sixty-six percent of the 215 respondents reported that the total assets under management (“AUM”) were at least $ 1 billion, including 22% with an AUM of at least $ 20 billion. The respondents were active in various segments of real estate, most often in office (50%), multi-apartment (47%) and retail (43%). To access Commercial real estate outsourcing and investmentresearch white paper, visit https://www.fticonsulting.com/insights/reports/outsourcing-traction-real-estate-investment-managers…
About FTI Consulting Real Estate Solutions industry practice
FTI Consulting Real Estate Solutions specialists have the industry knowledge and experience to help property owners, users, investors and lenders better navigate the complexities of the market and manage its inherent risks. As impartial and independent consultants, FTI Consulting represents leading public and private real estate entities and stakeholders including REITs, financial institutions, investment banks, opportunity funds, insurance companies, hedge funds, retirement advisors and owners / developers, offering real estate consulting services to help align strategy with business goals.
About FTI Consulting
FTI Consulting, Inc. is a global consulting company that helps organizations manage change, mitigate risk and resolve disputes: financial, legal, operational, political and regulatory, reputation and transactional. With over 6,400 employees in 29 countries, FTI Consulting professionals work closely with clients to anticipate, illuminate and overcome challenging business challenges and maximize opportunities. The company’s revenue for the 2020 fiscal year was $ 2.46 billion. For more information visit www.fticonsulting.com and contact us at Twitter (@FTIConsulting), Facebook as well as LinkedIn…
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