Guest Author: Ron Rossi, Vice President of Business Development, IMS
IMS recently presented at the REvolution Chicago 2.0 event hosted by IREM. The panel was moderated by Ron Rossi, VP of Business Development with IMS, and Ron was joined by Laura Dietzel, Senior Manager with RSM US, and Casey Grier, Regional Sales Director with IMS. The panel discussed their outlook on the commercial real estate market as well as technology trends. They also provided a demo of the leading and only complete investor management solution IMS, both on the sponsor side and on the investor side.
A very common question these days is where are we in the real estate cycle. We continually poll our clients and the market, and the results consistently indicate that a majority agrees we are in a hyper supply phase. However, there is some softening in the fundamentals with respect to certain markets and asset classes. Ron pointed out, for example, that it is more granular in the multifamily market where data is showing softening in the class A space, which can be attributed to a tick up in interest rates, construction costs, and the labor market. Laura and Ron discussed how there continues to be interest from investors, despite our position in the cycle. More cash is certainly being allocated to real estate; historically that allocation has been in the 5% range but is now between 15% and 20%. Commercial real estate continues to provide positive and consistent returns.
Even though we are in this hyper supply phase, it is important for real estate operators to ensure that they are positioned for success at any point in the cycle. Ron pointed out that although 94% of companies have a digital roadmap only 48% have developed a digital strategy. However, by leveraging technology, you can enable your team to spend less time on manual back office tasks and focus on doing more deals, optimizing the current portfolio, and engaging with your investors. By embracing technology, you are freeing up time to dedicate back to value-add tasks and execute on a strategy. Further, the industry has seen a shift in investor demographics, and these investors are demanding easy, 24/7 access to their investments, which can only be delivered through technology. Laura wrapped up this topic by walking everyone through some tech trends that RSM is seeing with their clients. They are partnering with software providers to create a tech stack that automates processes and harnesses data to more efficiently run their business. Over at IMS, our clients see opportunity even in a recession and leverage tech to more efficiently deploy capital and to scale their portfolio.
With the stage set, Casey took the time to share a real-time demo of the IMS application and to answer questions from the crowd. He presented the sponsor side, which is where the real estate team works. It encompasses a portfolio overview to track the performance of an entire portfolio as well as each individual asset. The CRM enables the sponsor to better facilitate communication to their investors and perspective investors through individual and bulk email campaigns, as well as offers a task manager. Clients can see the full capital structure and org chart for all entities and individuals across every deal. IMS also has a proprietary cashflow model that takes the place of all of those Excel files by calculating and running complex waterfalls and investor distributions. Investor statements are built within IMS and delivered to their investors through the investor-facing portal. In this portal, which is accessed through a web browser or the mobile app, investors have real time, on-demand access to their investments including performance history and metrics, documents, and new investment opportunities.
Lastly, the panel discussed what’s next in the industry. As the digital disruption continues, Laura emphasized the need for awareness when it comes to security and privacy. “Data breaches are happening more and more, and the cost in penalties alone can be in the tens of millions or even in the billions,” said Laura. There are three waves that need to be considered when ensuring data is protected. The first is traditional security: defend your company’s physical data, crown jewels, and on-premise devices. The second is cloud, IoT and perimeter: defend your company’s cloud data and digital devices. The third is privacy: defend the individuals’ personal data, which is likely millions of records and data points.