Asset management teams are tasked with one of the most important responsibilities in a commercial real estate transaction: making sure the investment property or portfolio is being managed in accordance with the business plan from inception until the deal is sold.
This article explores how ArborCrowd’s Asset Management Team is integral to each stage of a transaction.
Before a deal is offered on ArborCrowd’s platform
A deal cannot simply “work” on paper; it must make sense in real life. Therefore, our deals are rigorously vetted by the ArborCrowd Underwriting Team before they are made available on our platform. Our asset management team works with our underwriters to evaluate a deal’s fundamentals prior to a decision to invest in any particular property. Because our asset management team is immersed in the specifics of a deal so early in our underwriting process, they are already knowledgeable about the investment before the transaction closes and don’t have to play catch up.
Moreover, an ArborCrowd affiliate prefunds the equity in every deal, which means our asset managers have already started deal oversight before the transaction is even live on our platform.
During the lifecycle of the deal
Real estate transactions do not always go exactly as planned, even if the outcome is ultimately a success. The asset management team acts as ArborCrowd’s eyes and ears with respect to a transaction’s progress. By being in frequent contact with sponsors and property managers, and reviewing income statements, balance sheets, and rent rolls, they are able to assess when a property is performing as expected or when it is falling behind initial projections.
Furthermore, members of our team periodically visit the properties to see the progress in person, allowing them to gain a deeper understanding of any potential issues that may arise. This also allows them to better assess the status of the project’s construction or renovation compared to the timeline and budget initially projected. The asset management team can identify areas that need attention so that senior management can ensure that the sponsor is aware of the issues and is working towards a positive result. Additionally, the team creates quarterly update reports for investors so they can stay informed about the transaction’s performance. The team also calculates and communicates investor’s pro rata share of property distributions.
During the exit phase of a deal
When the property is in the process of being sold, the asset management team will monitor the progression of the sale. When the sale ultimately occurs, the asset management team will ensure that ArborCrowd and its investors receive the correct distribution amounts. Finally, they will calculate the financial performance of the deal and report the appropriate metrics to investors.
Business plans appear to be linear, but much can happen over the course of a projected hold period. The asset management team is crucial to ensure that there is oversight of the deal and its sponsor from the beginning to the end.