It also shows that most companies still rely on custom-built Excel spreadsheets as the primary tool for measuring risk and running what-if scenarios. There is an urgent need for better information infrastructure and analysis tools across the industry.
Needham, MA (PRWEB) January 29, 2009
A survey of commercial real estate investment managers shows demand for information has been growing as the economy has been slowing down. Over 80% of the survey respondents say the frequency of demands for reports and information is either significantly higher or higher now compared to a year ago.
Survey results show that despite the growing demand for information, companies are struggling to measure many of the key risk parameters in a timely manner. Tenant exposure is one of these parameters which most companies still measure on a quarterly basis or even less frequently.
The survey further reveals the difficulties companies are experiencing trying to project future compliance with Loan-to-Value (LTV) and Debt Coverage Service Ratios (DCSR) as property values and projected income continue to decline. Over a third of the respondents indicated it takes them several days or weeks to calculate future DSCR for a portfolio of assets, and almost half of the respondents need that amount of time to calculate future DSCR for their entire fund. This is despite the fact that more than 70% of the respondents consider these ratios as either highly important or important to their financial and operational decision making.
Conducted by Resolve Technology , the survey was completed by over 50 representatives of investment management firms, REIT's, and private equity firms. "Risk management has become a paramount concern to investors and investment managers alike," says Resolve's CEO Eric Forman. "With property values going down and some tenants defaulting on lease payments, debt ratios can quickly be out of compliance with loan terms. Companies managing commercial real estate investments in today's market want to be able to analyze and understand these metrics on a daily basis, not monthly or quarterly."
What-if scenarios are used by most companies in the industry to evaluate future strategies, including strategies for managing real estate debt. However, only a third of the companies responding to the survey use what-if scenario to evaluate their debt strategies on a monthly or weekly basis, while 41% do it once a quarter and 22% only once a year or less.
"The survey clearly demonstrates the struggles of the industry to keep up with the growing demand for timely information and the need for proactive, forward-looking risk management capabilities," says Forman. "It also shows that most companies still rely on custom-built Excel spreadsheets as the primary tool for measuring risk and running what-if scenarios. There is an urgent need for better information infrastructure and analysis tools across the industry."
The complete survey results are available for download on the Resolve website at http://www.resolvetech.com/resources/surveys/debt%2Dsurvey%2Dregistration/
About Resolve Technology
Focusing on the unique needs of the real estate investment industry, Resolve's solutions help optimize investment strategies, proactively control and manage risk, and ultimately deliver higher returns to investors.
Resolve's software solutions remove the reliance on spreadsheets and automate data collection from disparate sources to present decision makers throughout the organization with reliable and up-to-date information.
Providing integrated business intelligence, portfolio management, and what-if analysis tools, Resolve enables real estate investment managers to evaluate changing market conditions with the speed and confidence required to hedge against potential risks and capitalize on new opportunities.
Resolve's products are used by the world's leading advisory and investment management firms, REIT's, life insurance, pension fund, and banking institutions, managing over 2 billion square feet of real estate worth more than half a trillion dollars. Customers include Behringer Harvard, General Growth Properties, Glenborough, LaSalle Investment Management, Prudential Real Estate Investors, Principal Global Investors, State Street Bank and Trust, and UBS. Founded in 1990, Resolve is headquartered in Needham, Massachusetts.
For more information, visit http://www.resolvetech.com.
All companies and products listed herein are trademarks or registered trademarks of their respective holders.
# # #