Real Estate Portfolio Management
The Special Position of Real Estate in the Asset Allocation
The special position of real estate in the overall asset allocation compared to other asset classes is underlined by a wide range of specific characteristics. Real estate is a tangible asset. Unlike gold, for example, it meets basic human needs: living, working, shopping or storage. As an investment, it generates relatively stable and therefore reliable cash flows. Rental income from real estate is normally protected from inflation by adjustment clauses. Its useful life makes real estate one of the most long-lasting assets.
Although earth and soil normally represent a resource with an unlimited life, buildings have both a technical and an economic useful life. As commodities, properties are relatively illiquid due to their uniqueness, their dependency on location, their high transaction costs and their investment volumes. The markets are known for their relatively poor transparency, heterogeneousness and high barriers to entry. Therefore, real estate investments always require a medium to long-term investment horizon. Furthermore, real estate comes in different types of ‘packaging’, each of which is subject to its own laws: be it a direct investment, a fund or a share.
Expanding Investment Universe, higher Standards
Increasing demand amongst institutional and private investors around the world for diversified real estate allocation has caused the global real estate markets to quickly grow in scale and complexity. The investment opportunities in the real estate sector are expanding dramatically. The dynamic investment universe, which consists of several thousand investment opportunities, requires in-depth, sound and (most importantly) interdisciplinary knowledge of real estate in order to spot the strategic investments in the multitude of markets and offers. Due to increasing regulation, the topics of environmental protection, social justice and responsible corporate governance – also known by the abbreviation "ESG" (Environmental, Social & Governance) – are also gaining in importance in connection with real estate investments and are placing new demands on valuation and reporting.
Marcard, Stein & Co identified this development at an early stage: Years ago we formed an experienced, interdisciplinary team of real estate experts. Our real estate and fund experts apply their extensive expertise to ensure a balanced, diversified allocation of real estate across countries, sectors, investment styles, managers and direct and indirect real estate investments.
This way we can counter the increasing return expectations of clients in this asset class. Strategic real estate allocation has drastically increased in significance in the past few years. The family office adapts institutional management approaches and applies them pragmatically to the real estate assets it manages.
Excellent Staff ensure top-quality Market Access
The wide range of real estate services provided by the family office is almost unrivalled at Marcard, Stein & Co. Our in-house experts are real estate economists straight out of the real estate industry. With their years of professional experience, they have immense expertise and excellent networks which they continuously develop. This even enables them to access markets with high barriers to entry. From the family office perspective, we have qualified specialists – from the perspective of the real estate industry, we speak and negotiate with market participants on equal terms.
Comprehensive Range of Services
On the basis of our real estate management expertise, we support families throughout every management phase – from strategy to sale through analysis, acquisition, management and controlling – for direct and indirect real estate investments in all critical aspects:
- Selection, analysis, management and control of indirect real estate investments such as institutional funds, public funds and real estate equity
- Conception and management of exclusive club deals and private placements for the indirect real estate investment
- Transaction advice for direct investments: Acquisition, management of acquisitions and sales, management of major leases, structuring of finance
- Real estate portfolio and property analyses: quantitative and qualitative real estate analyses, opportunity and risk analyses, management of implementation measures
- Real estate management: Selection of managers, control of managers, lease coordination, management of modernisation and maintenance measures
- Real estate control: Business plan, budget planning, valuation and reporting
Direct and Indirect Investments
There are two types of investment when it comes to strategic real estate allocation: direct and indirect. Direct investments mean the physical possession of real estate, whereas indirect investments comprise all types of certified real estate such as funds, club deals and even real estate equity. The investments can be categorised more accurately in the next step: by country and sector as well as by various investment styles defined on the basis of expected yield and risk profiles.
Assumption of the Owner's Responsibilities, Combination of Investment Styles
The committed advisers at Marcard, Stein & Co produce actively managed real estate portfolios in which the various styles of direct and indirect real estate investment are balanced and combined in line with the requests of the client. The management and control of the real estate portfolio are greatly simplified and the considerable amount of time usually required by real estate ownership decreases significantly. It is also possible to generate relatively high returns by finding the right combination of real estate components.
‘Ground, soil and real estate always have a special significance and place within the overall portfolio, especially on volatile investment markets. Consequently, the overall context of the assets always involves real estate allocation.’
Real Estate Portfoliomanagement