Whiteboard Wednesday – The Real Estate Investment Lifecycle

Episode eleven of our Whiteboard Wednesday series features Arik Kogan, Director of Product Management, talking about the real estate investment lifecycle. At MRI Software, our real estate investment lifecycle model covers everything from raising capital, to reporting to investors – and everything in between. Arik covers how MRI Software’s suite of real estate investment management software comprehensively covers all aspects of the investment lifecycle.


Video Transcription

Arik Kogan: Hi, my name is Arik Kogan. For this Whiteboard Wednesday, I’m going to be talking to you about the investment lifecycle. One of the things that we’ve really tried to tackle at MRI over the last few years is how to address some needs of the real estate investment market. Obviously, we’ve got property management and accounting down pat. We’ve got that sorted out. What we really needed to do is address the needs of those institutional investors, pension funds, the REITs, and various private investors that need to track the performance of their assets and also identify how they want to deploy capital in effective ways.

Let’s talk a little bit about the investment lifecycle from start to finish. The first thing that an investor is going to need to do is raise capital. We’ll put here raise capital. That would be step one. Is to raise capital. The second step is to invest that capital. We’ll put here invest capital. Step two. The third step once you’ve invested that capital is you want to report the financials of those investments. We’ll put here report financials. That is step three.

Once you have the financials and you’ve invested that capital, you need to monitor the performance of those assets. I’ll put here monitor performance. Now you have a portfolio of assets, you’re monitoring the performance of those assets, now you need to think more long-term. What’s going to happen to my portfolio in two years, five years, ten years? Because ultimately, you want the value of that portfolio to increase over time and the dividends to increase over time. What you need to do is formulate strategies and that is step five.

Finally, to those who are managing these funds or portfolios of assets, you’d want to report all of the information that comes out of this process to your investors. Finally, we have report to investors. These six steps are what we at MRI consider to be the investment lifecycle and it’s not just enough to understand what the lifecycle is. We need to provide solutions to the market then address each and every piece of this lifecycle.

What are the products that we have in place? For raising capital, we have Investment Central which is a web-based application that contains all the data associated with your pipeline, your investors. It allows you to send notifications to those investors about potential deals and notices and so on. Investment Central is a key tool and that’s tied very closely to Investor Connect which is our web-based portal for the investors themselves to receive the information you want to make available to them.

There’s also one other piece that’s worth mentioning here and that is Global Valuations. Global Valuations is our real estate valuation tool. It allows you to generate DCF valuations, cap valuations, cost valuations in North America. In the UK, it allows you to do your terminal version, your hardcore valuations, and all the equivalent valuations in APAK as well. This is what you would use to underwrite the potential deals that you’re interested in pursuing and providing information to your investors about.

Investing the capital. There’s really one application to talk about here and that is Investment Accounting. Investment Accounting is a tool that’s tied directly to the accounting solution that allows you to do your consolidations, to post your contributions, to calculate your distributions, to track your capital calls and your commitments. This is the tool for accounting when you invest capital. It is also the tool, over here, for generating your financial reports on those investments. It can generate consolidated balance sheets, trial balances, income statements but also investor-specific financial reports.

When we get to monitoring performance, there’s a number of solutions that can deliver really nice performance reports that will give you the information you need to monitor and track the performance of assets. This includes Investment Central that we’ve mentioned before. Investment Central allows you to generate dashboards, asset reports, could also fund a portfolio level reports as well as ad-hoc Excel reports that are all being driven off the information that’s contained in this database

In addition to that, we also have Asset Modeling. Investment Central is the appropriate tool for an asset manager. Asset Modeling is more of a tool for the analysts that support and report to the asset manager. In this particular product, you can not only report on the current actual information about those assets but you can also generate your forward-looking information, your valuations, you can drop all of our forward-looking information to portfolios and so forth.

When we get to formulating strategies, we now move into Fund Asset and Debt Modeling. The fund asset and debt solutions allow you to not only bring all of your information into one place and report on that information both at an asset level and a consolidated level, but it allows you to do all of your strategic forward-looking analysis. You can build your asset business plan, your portfolio business plan, you can build a strategic plan for the next five years across your entire fund, you can value all of your assets, you can layer on forward-looking debt assumptions, not only for existing loans but also refinancing.

You can generate hypothetical assumptions around transactions, buying new assets, selling assets, taking on debt, doing dividend reinvestment plans and so forth. This is where you do all of that strategic analysis. Then finally, reporting to investors we come full circle to Investor Connect. Investor Connect again, web-based portal for investors to log in and access all the information they need or has been provided to them by the asset manager or the fund manager about not only how those assets are performing and what their distributions are going to be for the quarter or for the next five quarters but also information about the strategic plan for that portfolio and the investments that they’re invested in.

This is the investment lifecycle. We’re very proud at MRI to say that we’ve addressed every single piece of this. Please contact us if you’d like to get a demo of any of these solutions. That is the Whiteboard Wednesday about the investment lifecycle. Thank you.

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