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By Devon Maresco
Enterprise companies with multiple real estate holdings have a lot of money tied up in static assets. As such, it’s critical for someone to monitor these assets to make sure they continue to generate revenue and other means of substantive ROI. This task falls to real estate portfolio managers—the people on the front lines of ensuring company properties align with mission-critical operations.
While facility managers oversee individual pieces of property and real estate asset managers examine them from an ROI standpoint, real estate portfolios are the true decision-makers of how to leverage all properties into company success.
What is a real estate portfolio manager?
Like you might pay someone to manage an investment portfolio of stocks, bonds, cash, and equities, in the corporate world, a real estate portfolio manager focuses on the properties owned and leased by a company. Their goal is to make sure the sum value of the properties—both their tangible worth and their contributions to operations—benefit a company.
Portfolio managers determine how facilities fit within the growth strategy of the company. They’re charged with looking at how the company’s resources are allocated, what risk real property poses for the company, and how to best leverage individual properties for greater portfolio performance.
Chief tasks of a portfolio manager
Because they deal with the performance of an entire portfolio of properties, the role of portfolio managers shifts to broader considerations. They may make decisions affecting specific properties, but they do so with the intent to affect better performance for the portfolio at large. Some of the chief tasks they’re engaged in include:
- Asset allocation: Real estate is an asset, but there are smaller assets within each property that contribute to its revenue output. Allocation of assets—including budgeted capital—can affect the performance of a portfolio by enhancing the revenue-generating capabilities of specific properties. The simplest example might mean moving unused assets from Location A to Location B, where they become part of a revenue stream.
- Risk adjustment: Real estate carries risk. As an asset, that risk manifests in the form of debt on a balance sheet. The job of a portfolio manager is to ensure the collective ROI of properties is enough to outweigh their risk, and to understand which properties in the portfolio are riskier vs. safer. Risk adjustment can involve making decisions like where to allocate funds for capital improvements, to mitigate the risk of future costs.
- Transaction supervision: Similar to a securities portfolio, properties may enter or leave the fold of a real estate portfolio. As they do, a portfolio manager needs to see that they’re purchased and divested the right way. This can involve everything from overseeing the financial transaction to receiving or divesting the property as an asset on the balance sheet.
- Execution of asset strategy: Real estate needs to align with the company’s goals and trajectory, and serve to move it forward. It’s the job of real estate portfolio managers to make sure real estate serves its intended purpose, whether that’s solely revenue production or strategic goals. When real estate and company goals align, the business can move forward with a cohesive operational strategy.
All these tasks lay the groundwork for one final, critical objective: to liaise with executives and other stakeholders and support data-backed decision-making involving real estate. Portfolio managers work to understand the effect of company decisions on real estate, as well as relay real estate information to help influence those decisions.
Real estate portfolio manager software
Real estate portfolio management is quantitative. Managers need access to the vital insights and data streams that contextualize the decisions they make. While they can get much of it from real estate asset managers, much of that data comes from software.
When examining a collection of portfolios across different building types, geographic areas, property sizes, and other variables, data becomes a source of truth in decision-making. With clean, organized, reliable data from various property funnels at their disposal, it’s easy for managers to delve into the portfolio with a mind for each property and its contribution to the whole.
What do real estate portfolio managers do?
In a nutshell, real estate portfolio managers make sure a company’s investment in property is worth the ROI is offers. Rather than dissecting the microcosm of any individual property, portfolio managers make higher-level decisions that affect the company at large—decisions like whether to move headquarters, consolidate facilities, or buy vs. lease a property. Most important, they juxtapose real property to the business in fundamental ways that allow for better decision-making.
Keep reading: What Can You Do with Real Estate Analytics?