alintra is an owner-run company which was set up in 2005. We manage property portfolios for institutions, and the core of this work is creating immediate transparency for banks, investors, insolvency practitioners, CMBS special servicers, and other bodies in need of our services. alintra’s approach involves more than just gathering data: understanding and correctly interpreting information allows us/’our clients’ to take measures to secure liquidity and permanently strengthen cash-flow structures.
In order for real estate items to return a profit, the people running them need to understand figures and be able to make a range of data sets comparable with one another. The crucial factor for successful property portfolio management is a sound understanding of the sector, and we have a proven track record of optimising data quality and processes in the real estate sector so as to produce a tangible increase in revenue.
2. 2
This presentation was prepared exclusively for the benefit and internal use of the
Alintra client to whom it is directly addressed and delivered. This presentation is
for discussion purposes only and is incomplete without reference to, and should be
viewed solely in conjunction with, the oral briefing provided by Alintra. Neither
this presentation nor any of its contents may be disclosed or used for any purpose
without the prior consent of Alintra.
4. Overview
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1. Alintra‘s offering
2. Real estate in transition
3. Transparency as a shared service
4. Functional elements
5. Technical aspects
Alintra‘s offering | Real estate in transition | Transparency as a shared service | Functional elements | Technical aspects
5. Alintra’s offering
• arsago is a platform for Alternative Investments for institutional investors; Alintra coordinates the
Controlling / Accounting / Liquidity / Tax / Reporting framework
• 2004, arsago Real Estate and Morgan Stanley Real Estate Fund established a JV which acquired
15.000 residential units and required institutional calibre reporting
5
Initiating a real estate fund ….
Alintra offers real estate transparency: a service defined as detailed, comprehensive, timely
and customized reporting on the basis of advanced cash-flow controlling
• Controlling gained new importance when the financial crisis hit real estate, banks, insolvent SPEs,
CMBS
• Alintra’s experience gained from transparency of own fund attracts various parties in demand of
outsourcing partnership
• Modular approach to demonstrate return, risk & liquidity
… as a foundation for providing shared services
Alintra‘s offering | Real estate in transition | Transparency as a shared service | Functional elements | Technical aspects
6. New dynamics in real estate
6
Alintra‘s offering | Real estate in transition | Transparency as a shared service | Functional elements | Technical aspects
• Reporting was long regarded as a by-product
• Institutional investors and lending parties consider transparency as a key concern when providing
capital
• Quality of investor communication plays a key role in establishing investor confidence
Prop
Mgmt
Equity/
debt
Asset
Mgmt
Water-
fall
Cash does not lie !
7. Change of the real estate industry
• Re(finance) is
key
• Successful
enterprises
scrutinize
structural set-
up
• Reporting as
an external
obligation
• Built on
advanced
controlling
Alintra‘s offering | Real estate in transition | Transparency as a shared service | Functional elements | Technical aspects
The real estate sector has faced considerable changes ….
• Investor perception of asset class „real estate“: Leverage necessitates
operative resources to stabilize the cash flow
• Once bitten, twice shy: Lending parties raise reporting requirements
substantially
• Insolvent portfolios as investment opportunity pose the question how a
potential purchaser can achieve the turn-around
…. real estate companies have to adjust
• Capital sourcing: bottle-neck or catalyst for organisational overhaul?
• Cash flow statement as road map for strengths & weaknesses
• Focus on core competence: reletting & collection activities, overhead
• Outsourcing of controlling & reporting functions
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8. Transparency: a bunch of charts?
8
Alintra‘s offering | Real estate in transition | Transparency as a shared service | Functional elements | Technical aspects
9. From historic data to actionable decisions
9
Predict!
(What will happen?)
Operativeobjectives
data action
Alintra‘s offering | Real estate in transition | Transparency as a shared service | Functional elements | Technical aspects
• Transformation
of raw data
into
information
• Predictive
analysis
provides
valuable
insights
• Vacancy reduction
• Collection of arrears
• Overhead management
• …
Analyse! (what has happened?)
Explain!
(How? Why?)
10. Transparency requires a revolving process
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Alintra‘s offering | Real estate in transition | Transparency as a shared service | Functional elements | Technical aspects
• Agility
• Connectivity
• Flexibility
Topics:
• Liquidity
• Controlling
• Reporting
Objectives:
• Aggregate portfolio
overview
• Rapid alert system
• Strategic controlling
system
Requirements:
• Integration of vast data
marts
• Extensive experience in
both finance and real
estate asset management
Integration
Business
Plan
Liquidity
(Act &
Plan)
Prop Mgmt/
Collection Acc
Financial
Accounting
Reporting
& Ad-hoc
queries
11. Business Plan: compilation of expectations
• Tight link between operations and funding; permanently monitored
• Binding character (e.g. element of shareholder & finance documents)
• Objectives on various levels are cross-checked in a timely manner
• Information:
a difference
that makes a
difference
• Transparent
accountability
impacts
performance
Alintra‘s offering | Real estate in transition | Transparency as a shared service | Functional elements | Technical aspects
Banks
Business
Plan
Asset
Manage-
ment
Investors
Property
Manage-
ment
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12. Elements of the annual Business Plan
12
• Narrative description of sales, rental profile, capex etc
• Plans for Financing of owner
• Projected income statement for the coming year
• Projected Operating Cash flow for five years in advance
• Projected balance sheet
• Marketing plan
• Leasing guidelines
• Insurance
• Projected construction
• Business Plan
as a Corporate
Memory
• Annual
revision
• Quarterly
reconciliation
(actual vs plan)
Alintra‘s offering | Real estate in transition | Transparency as a shared service | Functional elements | Technical aspects
Objectives are broken-down into sub-goals with clearly-defined
responsibilities; constant comparison of budget/actual
transparently reveals strengths and weaknesses on various levels
13. Business planning on a cash-flow basis
13
• All business plans are constantly monitored and annually revised
• Bottom-up Planning of NOI on a location/property basis
• Plans are
useless,
planning is
priceless!
Alintra‘s offering | Real estate in transition | Transparency as a shared service | Functional elements | Technical aspects
Liquidity
Management
Business Plan:
return & risk
Property
Management
Asset
Management
14. Lessons learned from controlling real estate
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• Property managers struggle to meet institutional demands
• Focus on cash flows is a paradigm change („Cash doesn‘t lie!“)
• Increasing human and IT resources are allocated to reporting
• Constant monitoring of every single property is a necessary, but resource-
consuming prerequisite for transparency
• Preparation of electronic filing cabinet needs collection, verification,
reconciliation, analysis and archiving of data from heterogeneous sources
• Both accurate electronic data and business intelligence software in order to
operate a cost-efficient centralized data warehouse
• (Dis)aggregate information over various areas of responsibility (e.g. prop
mgmt, asset mgmt, letting/collection/janitorial ressources) to attach personal
accountability for sub-goals of business plan
• Focus on cash
flows
• Upgrading
quality and
quantity of
underlying
data
Alintra‘s offering | Real estate in transition | Transparency as a shared service | Functional elements | Technical aspects
Economies of scale and scope
15. Outsourcing as a strategic option
15
Business critical
functions:
• Reletting
• Collection
• Overhead
Cost of ownership
reduced by out-
sourcing partner’s
economies of
scale/scope
• Financing as a
catalyst for a
functional
assessment
• Substantial
implicit ex-
penses for debt
compliance
• Transform
fixed costs into
variable costs
Alintra‘s offering | Real estate in transition | Transparency as a shared service | Functional elements | Technical aspects
The answer to all strategic worries or the ultimate evil?
16. Real estate transparency: make or buy?
16
• Institutional calibre reporting demands both an aggregate portfolio
overview and the flexibility to drill-down to detail
• Integration of financial accounting, liquidity, rent accounting, debt
compliance & waterfall, planning & forecasting
• Regulatory and debt compliance requires modelling and monitoring of
complex conditions and individual covenants
Challenges • Beyond past
performance
• Early warning
system
• Foundation for
strategic re-
assessment
Alintra‘s offering | Real estate in transition | Transparency as a shared service | Functional elements | Technical aspects
• Continuous improvement of process quality by accelerated acquisition
of consistent raw data lowers cost of ownership
• Cross-portfolio analysis allows evidence-based decision-making
• Flexibility for ad-hoc requests deepens investor confidence
Benefits
17. Compliance with institutional reporting needs
17
• Quarterly reports no later than 20 day after end of cal.q.
• (un)audited balance sheet & statement of income & expenses
• Cash flow statement to reconcile business plan quarterly
• Accounts receivable aging summary
• Status of collection activities
• Individual reports
• Computer compatibility
International investors set demanding reporting standards which
reflect sound practices of asset/property management
Alintra‘s offering | Real estate in transition | Transparency as a shared service | Functional elements | Technical aspects
• Business plan
• Rent accoun-
ting/contractual
rent
• Financial ac-
counting/actual
• Liquidity
management
18. Cash doesn’t lie! – Liquidity vs accrual accounting
18
Responsible
Per
property PnL Liquidity
Facility Mgmt/ Asset Mgmt + Rental Income + Rental Income
Facility Mgmt/ Asset Mgmt - Maintenance expense - Maintenance expense
Facility Mgmt/ Asset Mgmt - „rental loss“ - „rental leakage“
= Income 1 = Liquidity 1
Asset Mgmt - Capex, if expense - Capex
Asset Mgmt - promotional expenses - promotional expenses
= Income 2 = Liquidity 2
(Dis)Investment Mgmt + privatization gains + privatization proceed
(Dis)Investment Mgmt + blocksale gains + blocksale proceeds
(Dis)Investment Mgmt - commissions - commissions
= Income 3 = Liquidity 3
Alintra‘s offering | Real estate in transition | Transparency as a shared service | Functional elements | Technical aspects
19. Cash doesn’t lie! – Liquidity vs accrual accounting
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= Income 3 = Liquidity 3
Fin. Controlling/ Facility Mgmt ± cost of operations
Fin. Controlling () - Mgmtfee - Mgmtfee
Fin. Controlling - accounting/audit/other - accounting/audit/other
Fin. Controlling - interest - interest
Fin. Controlling - depreciation - amortization
Fin. Controlling - income tax - income tax
= Income 4 = Liquidity 4
Investor relations - Distributions - Distributions
= p/l per period = Cash per period
+ p/l previous periods + cash previous periods
= p/l carried forward = Cash to date
Alintra‘s offering | Real estate in transition | Transparency as a shared service | Functional elements | Technical aspects
20. Seamless exchange as success factor
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Alintra‘s offering | Real estate in transition | Transparency as a shared service | Functional elements | Technical aspects
In order to efficiently tackle the requirements of private equity real estate
investments we have established an organisational setup which exchanges
data within the various providers and requestors:
• Due diligence database
• regional Asset-Management Teams
• Various Property Management Agents
• Liquidity- und Loan-Management
• Business Planning Team
• Accounting & Tax
• Auditors
• Investors
• Complex data
structures
• Tight reporting
schedules
• Seamless ex-
change without
media con-
version
Property
Mgt.
Asset
Mgt.
Liquidity
Management
Complex data and tight reporting schedules
21. Continuous integration of data warehouse
21
Portfolio
Management
Asset
Management
Property
Management
BP cash ledger
….
….
Alintra‘s offering | Real estate in transition | Transparency as a shared service | Functional elements | Technical aspects
Information requestors
heterogenueousdatasources
22. Layers of data management
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Alintra‘s offering | Real estate in transition | Transparency as a shared service | Functional elements | Technical aspects
Data Collection
Data Cleansing
Monitoring
Analysis
Rep.
• Client focused reporting
• Performance attribution, e.g. letting, collection, overhead
reduction
• Analysis on various levels according to business plan
• Archiving in a data marts
• Intelligent, rule-based plausibility checks
• Automated translation between differing input formats,
Standardized input requirements
Collection, verification, analysis and reporting of heterogeneous data
23. Business intelligence for real estate data
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Alintra‘s offering | Real estate in transition | Transparency as a shared service | Functional elements | Technical aspects
• Continuous data requests from property managers, banks, other data
providers (timely, accurate, consistent, electronic!)
• Systematic follow-up for missing or modified data
• Connectivity through various input formats
Exchange, transfer & load
• Filing of all relevant information electronically
• Proven data models can easily be adjusted to specific requests
• Data retrieval within portfolio context
Data modelling and storage
24. Advanced analysis of real estate data
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• Performance measurement
• Flexible analysis levels
• Scenario analysis to evaluate cash flow impacts
• Standardized reporting format is assisted by flexible multi-criteria ad-hoc queries
• Integration of real estate data and meta data, e.g. local responsibilities
• Encouraging of pro-activity by transparent accountability
• Transformation of disjoint property data into decision-making fundamentals
Alintra‘s offering | Real estate in transition | Transparency as a shared service | Functional elements | Technical aspects
25. Monitoring of real estate portfolios
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Alintra‘s offering | Real estate in transition | Transparency as a shared service | Functional elements | Technical aspects
• Key performance indicators are derived from business plan
• Cash management & cash flow forecast
• Predefined event-driven profiles for alerts
• Representation of waterfall of bank accounts
• Debt compliance checks & alerts
• Capacity to efficiently oversee highly diversified portfolios