Financial asset management is a critical operational element for private equity real-estate companies as it allows them to effectively manage and optimize their portfolio of assets. This includes implementing financial strategies such as budgeting, forecasting, and risk management, as well as utilizing technology and data analytics to improve decision-making and overall performance.
In the current competitive business environment, for real-estate developers to be successful, effective financial asset management can help a private equity real estate company achieve its investment goals, such as maximizing returns, minimizing risk, and ensuring the long-term sustainability of its portfolio.
Additionally, having strong financial asset management capabilities can help a private equity real estate company gain an association of good institutional investors and retain investors, alongside managing wealth generation for stakeholders.
Institutional investors and HNWIs always have expressed a preference for private equity real estate investments in real-estate holding companies demonstrating strong financial management and performance.
Scores of real-estate companies are integral to the industry, however, very few organizations stand successful and sustainable. Implicitly, private equity real-estate companies are often faced with a difficult decision in managing their financial assets. According to industry leaders, the most pressing challenge faced by PE real estate firms is their lack of long-term funding strategies.
30% of private equity real-estate executives surveyed by PwC say that the biggest challenge they face as business owners is the lack of long-term funding for their operations. Failing to identify proper market segmentation/customer personas/who the market customer is/what their needs are and working on the customer experiences management.
However, in spite of the impressive growth that has taken place over the past decade or so, a lack of long-term funding from traditional sources continues to lead to challenges of wealth generation in all projects of private equity real-estate developments, without good participation from institutional investors.
Financial asset management can help private equity real-estate companies manage vertical integration well by providing them with the tools and insights needed to effectively manage the different stages of the real estate development process.
This includes everything from identifying and acquiring properties to developing and renovating them to leasing and managing the properties once they are operational. Such an integrated approach can help in sustainable growth leading to wealth generation.
By implementing financial strategies such as budgeting, forecasting, and risk management, private equity real-estate companies can ensure they have the necessary financial resources to complete each stage of the development process, while also minimizing risk and maximizing returns.
Additionally, utilizing technology and data analytics can help private equity real-estate companies make more informed decisions and optimize the performance of their portfolio.
Vertical integration allows private equity real estate companies to have more control over the entire development process and gain more profits by managing each stage of the process themselves.
Financial asset management capabilities are important in this context as it helps the companies to have better visibility of the financials of the project and make decisions accordingly, and attract talent pool, and participation from the private equity real estate investors.
Here are a couple of examples of possible asset management strategies for a private equity real estate company.
Value-addition: This strategy involves acquiring underperforming or undervalued properties and making improvements to increase their value.
Core-plus: This strategy is like value-add, but the properties acquired are typically in better condition and may require less significant improvements. Many of the successful private equity real estate investments have reaped the benefits of such opportunities for wealth creation.
At 33 Holdings – our organizational vision, work culture, and capability model, focusing on effective financial asset management enables and empowers our endeavors in our quest to maximize returns through private equity real estate.
The 33 Holdings investment relations team can be reached over email at ir@33holdings.com or over phone at 678.824.4508.
