Tag Archives: asset manager

Asset Managers Who Know The Lay Of The Land - AZ Business Magazine Jul/Aug 2010

Today’s Fragmented Market Requires Asset Managers Who Know The Lay Of The Land

During turbulent economic environments, many institutions and individual property investors lack the local market knowledge, vendor relationships, licensing, staff, experience or operational knowledge to effectively manage and/or reposition distressed real estate assets. As such, the day-to-day management oversight and short- to midterm turnaround planning has been assigned to local market asset managers.

Role of an asset manager

The necessity of a local market asset manager has proliferated over the years as real estate has gone from individual to institutional ownership, and from the management of a few properties in a single market to large portfolios located in dispersed geographical areas. The focus of an asset manager is on the decisions that impact the property’s financial performance and, ultimately, ownership’s investment returns. An asset manager generally oversees property managers, leasing and investment sales brokers, architects, engineers, contractors, attorneys and other related vendors. Duties of an asset manager include devising and implementing turnaround plans; insurance and real estate tax reviews; negotiating leases and tenant relations; procuring and managing contractors and suppliers; budgeting and contracting for tenant build-outs and capital improvements; financial analysis and reporting; and positioning assets for sale.

Advantages of an asset manager

Having a local market asset manager who provides leadership and guidance to an investment group’s real estate assets is imperative to be able to react to and anticipate market changes and implement solutions when positioning assets for sale. Asset managers have extensive market expertise, know the dealmakers in their respective markets and have the ability to think strategically and execute tactfully. As such, engaging a local market asset manager will yield better investment operating performance, quicker lease-up of vacant space and more timely execution of sale.

Disadvantages of an asset manager

The main disadvantage is that property owners may lose some control to the asset manager. Depending on the investment structure of the ownership entity, property level decision-making would shift from the owner to the local asset manager. Contrary to some, this hierarchical structure streamlines property level decision making and allows asset managers to react quickly to local market dynamics and tenant and buyer needs. Due to the dislocation in the commercial real estate market, national groups have delegated property-level decision making to regional and local market asset managers.

Financial institutions, special servicers, investors, developers and owners of real estate holdings should strongly consider engaging a local market asset manager to reposition their underperforming assets. An asset manager has extensive market expertise, knows the dealmakers in their respective market, and has the ability to think strategically and execute value preservation or enhancement plans.

The real estate market is extremely competitive. In an environment with negative net absorption, declining effective lease rates and expanding cap rates, owners are jockeying over the same tenants and buyers. A local market asset manager will be the difference in reacting to local market changes and maximizing investment returns and/or loan recovery.

Arizona Business Magazine Jul/Aug 2010

Jeff Roberts Opus West

Jeff Roberts – Vice President Of Real Estate Development At Opus West

About 10 years after its Phoenix headquarters opened in 1979, Opus West came up against a major recession in the Valley. It survived that test and is weathering today’s economic downturn with the same tactics.

A division of the Minneapolis-based Opus Group real estate development company, Opus West is going head-to-head with Arizona’s moribund economy with its corporate structure, diverse product base and a development philosophy that has served it well.

“We are vertically integrated and that allows us to react quickly in good times and bad,” says Jeff Roberts, vice president of real estate development.

Opus West has in-house property management, construction, design and development services. Presently, the company’s design-build staff is opening new revenue streams by offering its services to outside clients, such as corporations and governments.

The company still looks for opportunities and is more likely to find them within its broad line of products — retail, industrial, office and residential, including condos, apartments and senior housing.

As part of its approach to development, Opus West does not hinder its flexibility with a sizeable property portfolio and keeps its land inventory low, Roberts says.

“In the late ’80s and early ’90s (recession), many companies accumulated a large portfolio and were much more affected, while we had built our buildings and sold them for a profit,” he says. “That makes us much less subject to market cycles.”

In these tough times, Opus West is again focused on finishing existing projects to get new tenants moved in, taking care of existing tenants and keeping the door open to build-to-suit projects for tenants that are willing to commit, Roberts says. Projects on its plate include the 263,000-square-foot mixed-use Tempe Gateway building in downtown Tempe and the 170,000-square-foot Mill Crossing shopping center in Chandler.

One bit of good news Roberts sees in today’s economy is a “reasonably strong amount of large tenant activity” as companies move for economic reasons or to take advantage of a down market and upgrade to nicer space. Roberts expects little new construction in 2009.

“I don’t look at it as a year where there will be any major projects,” he says. “It will be a year of people working through leasing up what they’ve got and, hopefully, a year we hit bottom and see things heading back up. The big question is whether the economy picks up enough where we can get some significant net absorption.”

Roberts has more than 17 years of real estate experience in eight different cities. Prior to joining Opus West, he was an asset manager for Beta West in Denver. Roberts holds a bachelor of science degree in real estate from Arizona State University.