7 Winning Strategies for Scenario Modeling Using Your Commercial Real Estate Data

Generally, the analytical tools that are commonly used by many CRE companies, like Excel, are cumbersome and not powerful enough to meet today’s requirements. Some companies have stretched Excel as far as it can go as an analytical tool.

External Excel based models lack flexibility and cannot easily be modified to answer new questions and evolving conditions. In fact managing “what-if” scenarios and getting answers to complex questions is close to impossible to obtain, if at all. Successive running of multiple scenarios against data can often take days or even weeks. To devise, build and operate these models is a huge cost in labour and effort.
New Financial Modeling and Portfolio Management solutions allow users to overcome these inefficiencies and shortfalls by providing the power and flexibility to cater to all situations.

The calculation, consolidation and reporting engine should be adaptable to deal with:

• All varieties of asset types in any combination
• Country and regional valuation calculation methodologies and differences
• Any view or slice of the portfolio, fund or individual property for any given time frame (past, current and forecast periods) and in any combination

The Analysis and Reporting should allow:

1. The integration of portfolio, debt, valuation and fund management into a seamless system
2. A full portfolio management position picture

• Allowing drill downs to the lowest levels — to individual leases, units or properties
• Allowing full consolidations to the highest levels

3. At a glance reviews of Key Performance Indicators of debt positions at both the individual contract level or at the consolidated portfolio level

• A review in minutes versus the traditional one week a month marathon

4. User defined “what-if” scenarios and financial modeling against any combination of loans, properties, funds, valuation methods or an entire portfolio for any given time frame including

• Side by side comparisons of different scenarios and different versions
• Sensitivity analysis of assumptions

5. Ad hoc reporting capabilities — not just reporting at month or period ends but at any point in time whenever it is needed at a consolidated or detail level
6. Exception reporting – on potential funds over/under allocation and utilisation of capital resources amongst others
7. Project and forecast debt and cash flow requirements at any level

A successful and effective Financial Modeling and Portfolio Management system delivers accurate information, to the right people, at the right time. This magnifies and leverages the power of the information, delivering increased value and improved productivity, not to mention that good property data can transform a company and drive its competitive edge.

Huge operational efficiencies are also realized through the standardization and streamlining of processes, and the stress-free access to critical information by users throughout the organization.