Kylie Walsh: The changes make us stronger

Posted on by kestoesta

This blog post relates to Rockend, one of our previous brands. For more information please read the press release.

There’s no question that COVID-19 pandemic brought a rapid change in the real estate industry, forcing agencies to develop strategies that will help them adapt to the new normal quicker. For Di Jones General Manager, Kylie Walsh, the transition meant stepping up on their communication strategy. She talks about this and also shares how their agency dealt with remote work, arrears and reduced rental properties when the COVID-19 crisis hit in a recent interview for MRI Property Rockstars. 

“If you’d ask me prior to COVID-19 if we had good communication with our clients, I would’ve said it was 9 out of 10. Now retrospectively in the manner that we’ve been communicating with our clients, I would’ve said we were 5,” says Kylie on how the criteria for effective communications has changed in the past months. 

According to Kylie, re-aligning their communication and technology strategy with the challenges brought upon by COVID-19 has helped tremendously in running a customer-centric business, and she advises other agencies to do the same.   “I think we can lift our game with the amount of automation and technology that’s come over the last 90 days and what’s coming. I think people really need to have a good look at providing valuable communication, segmenting their database, understanding their demographic and tailoring their services towards what their customers want.” 

*MRI Property Rockstars is a video series in partnership with Real Estate Uncut. As part of the series, property commentator Kevin Turner talks to some rockstars of the property management industry about their business, tips, and personal stories.

Missed an episode? Watch more Rockend Rockstars episodes here.

Kylie Maxwell: Running Virtual Inspections

Posted on by kestoesta

This blog post relates to Rockend, one of our previous brands. For more information please read the press release.

Ensuring the safety of both staff and customers is imperative in running a business amid the COVID-19 pandemic. But how do you prioritise safety while ensuring your business still operates as usual? For Kylie Maxwell, Director and Franchise Owner of LJ Hooker Queanbeyan, her technology strategy plays a huge part as their team adapts to the new normal.

“As a leader, I think it is important that our staff felt safe and they’re across of what we wanted to do,” says Kylie. While the business had to close its doors to the public, baring visitors from the office and cancelling routine inspections initially, Kylie and her team turned to digital technology to continue the business as usual. “We made sure we had video walkthroughs on both rental and sales properties. That made it easier for the consumer to feel safe to do business with us.”

Moving forward, Kylie believes that being able to do virtual inspections puts their business at an advantage, “Going forward, there’s still going to be a lot of people who don’t feel comfortable in going out to look for properties, while some will want to be able to do so. We will definitely now tailor our suite of services to the individual.”

*MRI Property Rockstars is a video series in partnership with Real Estate Uncut. As part of the series, property commentator Kevin Turner talks to some rockstars of the property management industry about their business, tips, and personal stories.

Missed an episode? Watch more MRI Property Rockstars episodes here.

Tamsin Wilson: How COVID-19 is reshaping the property manager’s role

Posted on by MRI

This blog post relates to Rockend, one of our previous brands. For more information please read the press release.

Adaptability is one of the cornerstones of any successful property management team. But adaptability – especially in the midst of a global pandemic, requires more than mere adjustment to the situation. To Tamsin Wilson, Head of Property Management at Belle Property Parramatta, it also means reshaping the role of the property manager to fit the needs of customers during this challenging time and beyond. 

Continue reading “Tamsin Wilson: How COVID-19 is reshaping the property manager’s role” →

Hannah Carney: Managing a PM team during COVID-19

Posted on by MRI

As the industry adjusts to the challenges of operating in the time of COVID-19, we revisited some Rockend Rockstars to see how they are coping.  

In the first of the series, Hannah Carney of Schwarz Real Estate shared with us about what she sees as the challenges being faced by property managers in this pandemic, how she and the team are adapting, the concerns of tenants and landlords and how they are addressing them. 

Continue reading “Hannah Carney: Managing a PM team during COVID-19” →

Real estate valuations in the post-COVID-19 era

Posted on by Arik Kogan

Ah, 2019, you wily rascal you. You strung us along with your record-breaking rental growth and transaction volume. The people I met in 2019 were either giddy with celebration of another year of strong performance, or eyeing the situation with utter skepticism, asking “what’s the catch?” I found myself speaking at several MRI and industry conferences around the world, discussing both the lucrative exploits of real estate investors as well as the likely timing, severity, and characteristics of the next downturn.

We of course considered the cyclical nature of the real estate cycle – the transition from recovery to expansion to hyper supply to recession – and predicted that this cycle, like the last one that came to an abrupt end during the 2008 global financial crisis, would likely be a short cycle…though, with a much milder downturn that, for many, would be barely an inconvenience.

Oh, but how wrong we were. Enter 2020 – 2019’s evil cousin. If I had stood up at those conferences and said “Adjust your investment valuations, my friends, and hold onto your cash, because your real estate investments, regardless of asset class or location, are going to see sharp declines in KPIs due to a global pandemic in Q1,” I’m sure I would have been booted out of the building with no buffet lunch to show for it. I might as well have been saying that aliens in giant spaceships will hover over each major city on the 4th of July and destroy all the real estate in a 10-mile radius with green lasers!

But here we are, and whilst the real estate industry dedicates a lot of attention to managing receivables and their financial run rate, there is much to consider in terms of property valuations and the cap rates that are on the rise. Sure, transaction volume has nosedived, with the exception of distressed assets that the PE community are lapping up, so perhaps folks are willing to ignore the near-term volatility. But what about the longer-term effects of this pandemic on how our valuation market chooses to function in the future? Let’s look at a few possibilities:

1. A renaissance for discounted cashflows?

Many regions of the world do not standardize their portfolio and investment valuations around the DCF methodology, and perhaps that will need to change. The consideration of NOI and NCF over a prolonged hold period means you can reduce the impact of any cashflow volatility that occurs within that timeframe, or even offset it by applying a stabilization factor at different points in time to negate anomalies.

On the other hand, the standard 10-year hold period itself may need to change, since the once-lauded steadiness and predictability of real estate investment is now a debatable concept. The modern real estate market is forced to evolve more frequently, primarily due to tenants and residents adopting new technologies and innovations, which in turn alters their expectations of where they live, work, and play. This type of flux is extremely difficult to predict over a 10-year timeframe, thus potentially discrediting any portfolio valuation based on assumptive data that extends that far into the future.

So how do you address this dilemma? One option is to leverage reliable software. For example, MRI Valuations has the means to navigate this issue and accommodate any eventuality. In one tool, property and portfolio valuations can be generated using multiple valuation methodologies – DCF, Equivalent DCF, Capitalization, Cost, Hardcore, Term & Reversion, and more – and the results can be compared to one another on a rolling monthly basis. The hold period for a DCF calculation can also be adjusted to any number of years, or automatically tapered to the end of your forecast timeframe as you roll from one period to the next.

2. An evolving dataset to manage the big picture

The current pandemic has also proven that cashflow and tenancy data alone are insufficient to determine a property’s true value. Other data points, and qualitative data in particular, are becoming more and more pertinent, such as sales and footfall in retail, automated communications and facilities in conventional residential, environmental metrics across the board, and so on.

This was already a changing landscape ahead of COVID-19, but appraisers now have the additional challenge of limited access to the physical site due to social distancing. Those responsible for collecting and reviewing all this information will rely more and more on third-party data providers and virtual/augmented reality to visualize the site from afar.

Services like MRI’s Data Management Services that make data collection, normalization, and aggregation a quick and simple proposition – regardless of data source and format – are emerging as essential services for most medium to large-scale real estate businesses. Asset/portfolio management tools like MRI Investment Central and MRI Analytix that empower users to visualize this data, including custom attributes, begin to deliver even greater value and ROI.

3. Not just an appraisal…an advisory service

Pre-COVID, third-party investment valuation service providers were primarily responsible for delivering a current appraisal based on tenancy data and cashflows. Today’s job description is greatly expanded. In addition to managing many more data points, which in many cases are client-specific, the market will likely look to these seasoned professionals to provide more than just today’s value – they could assume the responsibility of an advisory service to help maximize value over time and weather the storms ahead.

This means performing sensitivity analyses; shocking a portfolio with pessimistic hypotheticals, such as tenant insolvency, reduced sales activity, government restrictions that impact cash flow, stricter lending criteria or higher margins, market rent and inflation fluctuations, and more. MRI Asset Modeling and Fund Modeling solutions build on the fundamentals for producing a property or portfolio valuation by layering on scenario modeling capabilities to deliver valuations, returns, yields and other metrics based on any number of potential futures. We will likely see valuation service providers being asked to become more and more savvy in this area, thus adopting more sophisticated tools than before.

Does 2020 have more curve balls up its sleeve? All predictions aside, the best path forward for real estate firms is to create business agility through flexible tools and processes. New challenges may have long-lasting effects on the approach to real estate valuations in a post-COVID-19 market.

Getting started with commercial real estate reforecasting

Posted on by Lori Clark

Performing a complete reforecast for your commercial real estate business is not a common task. It typically takes place only in the event of sudden economic shifts, like the one triggered by COVID-19. When your commercial real estate firm went through the budgeting process in Fall 2019, you probably didn’t account for the impact of a global pandemic on your business. For many properties, it’s time to throw your best laid plans out the window and create a new forecast, but where do you start? What are the main areas to consider?

Here are some tips to keep in mind when diving into commercial real estate reforecasting:

A new basis for assumptions

The whole point of budgeting is to make an educated assumption as to where your business is going to land at the end of the calendar year based on lease contracts, actual and historical data. But what historical data can serve as a reference for something as unpredictable as COVID-19? You will have to use your actuals from March and April and incorporate timelines from your property reopening plans. MRI Budgeting and Forecasting software can distribute variances from what actually happened through March/April over the rest of year for the whole workbook or, as is more applicable now, differently from account to account.

Finding the variables of new importance

You’ll need to identify areas of your commercial business that have been disproportionately affected by the pandemic, which are likely to vary based upon property types, locations, and tenant mix. Certain categories of maintenance, such as cleaning, might actually go up in terms of keeping the property running. Rent will play a bigger role, especially if tenants have trouble paying or need to negotiate deferred payment agreements. If you won’t be able to rely on certain revenue streams, then everything from landscaping costs to capital projects may need to be reevaluated.

Commercial real estate budgeting software from MRI offers an efficient way to draft a new budget and start pulling levers like these to test for different outcomes.

Budgeting and forecasting for what lies ahead

You might be inclined to keep some or all of your leasing assumptions in the new forecast, but many properties will need to start over. Will more deals trend toward shorter lease terms or smaller footprints? The future of commercial office space could look very different than it does today if corporations decide to reevaluate their needs. Effective space management tools and forecasting based on new assumptions can help your business reassess the different best and worst case scenarios in a market that looks completely different than your previous assumptions. A short-term plan will impact the long-term strategy for your business, and technology can provide the agility to respond to change while driving the business forward.

Commercial real estate organizations need to make reforecasting a priority for the business. Even with continued uncertainty in the economic environment, evaluating the impact of different scenarios on your organization will influence strategic decisions for the business. The ability to leverage technology to operate with agility has never been more essential, and MRI’s Budgeting and Forecasting software can help you pivot efficiently and stay focused on running your business.