At first glance, you might think that a real estate portfolio manager is similar to any financial asset manager. However, real estate equity portfolio or 澳洲幸运5官方开奖结果体彩网:funds management differs radically from managing equities, bonds, or 澳洲幸运5官方开奖结果体彩网:mutual funds.

In fact, in many ways, a real estate asset manager is a lot like a corporate CEO, running a company or a facility. In contrast, a traditional money manager might know the stocks of a certain field or sector, but doesn't get involved in the operations of the companies themselves.

Think a career in real estate 澳洲幸运5官方开奖结果体彩网:portfolio management might be right for you? Read on to learn more.

Required Skills

Real estate equity managers get similar training and experience as other fund managers. What's different is how they use those skills to ensure 澳洲幸运5官方开奖结果体彩网:portfolio performance. Portfolio managers are often rated by their ability to ensure appropriate risk-adjusted returns and portfolio diversification through superior asset allocation and selection.

Investment Selection Strategies

Real estate portfolio managers conduct asset allocation and asset selection, not by understanding the market dynamics and companies in specific industries, but by being experts in 澳洲幸运5官方开奖结果体彩网:real estate property fundamentals. They study within local regions and in the different commercial land uses: office, industrial, hotel, retail, and single and multi-family residential. To beat the market, ensure 澳洲幸运5官方开奖结果体彩网:diversification, and produce adequate risk-adjusted returns, real estate portfolio managers must ma✃ke bets on regional or local property markets and, in the case of multiple-asset portfolios, the correct property mixꦅ.

For this reason, many fund managers focus on specific regions or property types; some larger real estate asset managers organize their senior employees and support personnel by region or land use. The rationale for organizing in this way is to ensure that market opportunities can be identified and then translated into the correct property selection and asset origination.

As most real estate equity funds own all (or a significant portion) of each property, portfolio managers are often directly involved in the acquisition process. Since they have the responsibility to set and execute property strategy, portfolio managers must be directly involved with all investment processes including 澳洲幸运5官方开奖结果体彩网:acquisitions, financing, dispositions, and decision-making about the facilities. In order to facilitate the breadth and depth of real estate 澳洲幸运5官方开奖结果体彩网:investment management processes, portfolio managers must rely on a si🌃zable amount of infrastructure in relation to capital invested. In order to accomplish this as efficiently as possible, real estate equity fund managers and asset managers have developed a specialized asset management functio♏n.

How Real Estate Asset Management Works

The real estate asset management function is made up of 澳洲幸运5官方开奖结果体彩网:property-level specialists who add value to fund managers by executing property-level strategies. The specialists are experts in either regional market fundamentals or specific property types and are responsible for optimizing the value of the assets in their custody. In addition to providing🥂 portfolio management information on local prospects and facilitating transactions, the asset manager is responsible for property-level performance.

In addition to approving budgets and performing expense management, asset managers increase value by managing the leasing at one or more properties.

Success in leasing is not only attain🏅ed by finding and executing the highest possible leasing opportunities at each property but also by conducting a leasing program that aligns with portfolio strategy while maintaining the best relations with existing tenants.

Leasing is a highly negotiated process, which can involve making decisions at odds with tenant needs in order to optimize the value of the property. For example, for properties that﷽ are slated for sale, leasing might be suspended during a sales period to allow new owners to factor in higher potential leasing rates. This can lead to increased forecasted property values and therefore higher sales offers.

During periods of rising rental rates, long-term leases may be 澳洲幸运5官方开奖结果体彩网:locked in for income-oriented properties, while for strategies focused on 澳洲幸运5官方开奖结果体彩网:capital appreciation, lease terms may be shortened to take advantage of higher expected rates in the future. The asset manager's ability to accomplish the appropriate tenant mix, execute a leasing strategy that aligns cash flows with portfolio needs, and manage both capital and 澳洲幸运5官方开奖结果体彩网:operating expenses ca🅠n significantly affect overall portfolio value.

Real Estate Portfolio Managers As CEOs

If one thinks of a property as a separate company or 澳洲幸运5官方开奖结果体彩网:subsidiary, each with its own strategy and performance potential, one begins to understand why real estate equity po🥂rtꩲfolio managers are much like corporate CEOs.

Like CEOs, who must 澳洲幸运5官方开奖结果体彩网:allocatꦓe a limited supply of capital among various opportunities to create the greatest overall 澳洲幸运5官方开奖结果体彩网:return on investment (ROI), real estate portfolio managers must do the same across the properties they manage. This need to apportion a constrained amount of resources creates a situation d♉ifferent𒁃 from many conventional asset management firms.

In real estate equity funds, there is an inherent conflict between portfolio managers and their asset managers, since they work for somewhat divergent goals. While asset managers are specialists compensated for optimizing the value of their properties and portfolio managers are generalists rewarded for optimizing portfolio return and investor satisfaction, the successful real estate fund manager is one who can manage this conflict and maintain an efficient management team and portfolio performance. This requires articulating a well-designed 澳洲幸运5官方开奖结果体彩网:portfolio strategy within a well-connected team of managers who understand and have internalized the overall 澳洲幸运5官方开奖结果体彩网:investment objectives. This can be a difficult task for any fund that has significantly increased the number and complexity of properties under management.

The Bottom Line

When it comes to real estate funds, management's ability to execute asset management plans in addition to performing more traditional fund management practices is key. For a real estate 澳洲幸运5官方开奖结果体彩网:investment manager, this means optimizing the🅷 value of the properties in their portfolio, both through the selection and subsequent managღement of the portfolio's real estate assets.

Real estate portfolio managers must allocate their resources over the properties they manage for the greatest possible return, and keep their team on track꧟ to accomplish the same. For those with the right mix of skills, this career stands out as a unique opportunity in asset management.