RFP Magazine

Commercial real estate investment is not just about the ‘deal’ and whether the numbers stack up, always make sure you are working with the right people before you get the cheque book out.

In reality people, from governments to lawyers, make the biggest difference in the success or failure of a commercial real estate deal. And during tough times of the last few years it was personal qualities that got people through the rough financial times with ‘patience’ cited as the most common virtue for survivors. So how do you know who’s good and what’s not? Confidence, market knowledge, experience? Below we asked investors and others working in the industry to share their views on how to pick the best partners for the job.

1. What makes a good asset manager? Does this change around the region?

• A great asset manager has a detailed understanding of the micro-market they’re working in and the drivers of their occupiers’ businesses. Putting these togetherenables you to identify and capture added value. (AN)
• Local Knowledge, Good Pulse on the market, technically sound and great people management skills. (PS)
• Good people skills and this does not change around the region. Knowledge of how to do the work. (SS)
• Opportunities will be abundant around every region in the future for Asset and Portfolio Managers. With less new development projects regionally and also as continental patterns changing in the mix, investment owners will be more focused on increasing the profitability of their existing assets and will turn to Asset and Portfolio Managers to make it happen. Demand for employees with the ability to maximize property and portfolio performance as Asset and Portfolio Managers, will increase sharply in the coming months and years due to the ever changing realestate market. (RK)
• Someone who is able to listen and understand clients individual needs and to provide a tailor made service to suit that individual client. Asset Management is not about a one size fits all approach. (AP)

2. What makes a good leasing agent? Good relationships or gift of the gab?

• Ultimately it’s about reaching out to the right tenant for the space. (AN)
• Again, sound knowledge of the market, solid marketing background, able to communicate the property, and yes, its all about the relationship. (PS)
• Gift of the gab opens door for businesses but only for short term. It leads to a good relationship, which is long term. To be independent as much as being a representative for the client. (SS)
• The leasing agent must find out as much information from the prospective tenants as possible to ensure a good fit for the landlord’s property. Both the leasing agent and the prospective tenant should be sure and informed about the leasing decision. Neither party should be made to feel rushed. Real estate experience is helpful in becoming a leasing agent, but knowledge of each particular property up for lease is absolutely essential. (RK)
• Good relationships. These are often developed over years rather than months. (AP)

3. Branding and marketing consulting companies are increasingly being used – what should you know about them before taking one on?

• Differentiate the two, and make sure they “feel” your brand and company. They need to be “one” with you. (PS)
• II have not used them personally but if I did, practicality would come first. On the other hand, track record would be important too. (SS)
• It is important for marketers to step forward and demonstrably expand mindsets, skills, and capabilities instead of sliding back into comfort zones. The medium or the message? Too often these days, the message is ignored in favour of the medium. The right messaging will differentiate your brand, drive stronger consideration and purchase behavior, and can be significantly more rewarding than figuring out what the most effective media are. (RK)
• Track record. Experience and understanding of your business. (AP)

4. What leads you to trust a fund manager?

• Experience and a clear vision (PS)
• II look for track record, alignment of interests and performance-based fees. (AN)
• Trust! Professionalism, transparency, accountability and reputation. (SS)
• The whole point of investing in a fund is to leave the investment management function to the professionals. Therefore, the quality of the fund manager is one of the key factors to consider when analyzing the investment quality of any particular fund. (RK)

5. Do you look for personal qualities when working with financiers? Does this change between debt and equity?

• Gain, experience and provide lateral solutions. (PS)
• Mostly the debt capital is very impersonal and driven by bottom line and if the times are hard you have to pay the loan repayment. It depends on the relationship you have with the banker and whether they are considerate about your unexpected operational bad news and rearrange repayments. (RK)

6. What make a good leader when it comes to property development of commercial space?

• Clear Vision, technically sound. (PS)
• Bottom up leaders are preferred over top down leaders. Communication is vital. (SS)
• Good leadership! (RK)
• A full understanding of the end users requirements. (AP)

7. What can a great lawyer bring to the table when structuring a deal and during due dilligence?

• Commercially Inclined and not legally driven. (PS)
• Deal should be structured by dealmakers, not the lawyers. Lawyers need to cover all the angles but not to structure the deal. The best for the lawyers to do is to stay out of the deal. But in due diligence, lawyers know well what is right from wrong. RE people should stay out of due diligence and let lawyers do their work. (SS)
• Real estate transactions are prone to region specific idiosyncrasies more than any other. It is therefore important to have good and practical lawyers on both ends of the table, to ensure smooth closure oftransactions. Particularly in India, title to property is a complicated question of law and facts. Unlike in many other jurisdictions, India does not offer sovereign guarantees to title, nor does India have amature regime of title insurance. Consequently, title certification by a solicitor / attorney assumes enormous importance. I am aware of instances where multi-million square feet developments have suffered enormously due to insufficient or faulty title certifications. Title jurisprudence in India once again has multiple region specific complications. It is critical therefore to have a lawyer with knowledge of local issues, conduct the due diligence exercise. Real estate transaction structuring is an art. The best transactions are structured by those attorneys who combine extensive real property knowledge with expertise in the financial instrumentation and structuring verticals. A good lawyer will bring enormous ease to the table, whilst structuring complex commercial leasehold transactions. In India, many commercial developments occur as joint developments between multiple landowners on the one hand and a developer on the other. Consequently, complications do arise in leasing such developments to multi-national tenants. The primary responsibility of a lawyer, at such times, will be to arrive at a structure that is legally enforceable whilst at the same time not heavily complicated. In my view, whilst an asset manager and a leasing agent may put together a commercially fantastic transaction, a bad lawyer can kill the deal instantly. Choosing the right lawyer is critical for a successful closure of the transaction. (SP)
• A good lawyer is invaluable. Again a full understanding of your business and requirements will prove hugely beneficial. (AP)

8. What makes a great government/city leader and what can they do to influence investor choices?

• Clear Vision. Converting “Talk” to “Walk” (PS)
• Someone who can sense changes. Innovative ideas and initiatives that actually work and accommodate in the community. (SS)
• Leaders that have learnt through example, such as war gaming for Leaders. Strategic Decision Making taking ideas from the Battlefield to the Boardroom. Looking at the value of stepping out of your comfort zone, looking around at the bigger picture, and taking the time to plan for the unexpected is essential. Too often, we are afraid to learn the truth, however through an understanding of the liberal use of real life scenarios, the people have potential to overcome complex problems by working together. Some of the scenarios can be disturbing, many can be eye-opening and insightful. (RK)

SS - Sarkunan Subramaniam, Executive Director, Knight Frank Malaysia
PS - Previndran Singhe, Chief Executive Officer, Zerin Properties
AN - Anonymous
RK - Ravindra Kumar, Principal, Pragrup – Architects.Engineers.Interiors
SP - Sajan Poovayya, Principal, Poovayya and Chair Karnataka State Council of the Federation of Indian Chambers of Commerce and Industry (FICCI)
AP - Andrew Pound, Director – Asset Management, CP Property Services Limited


Technically speaking…
While numbers don’t make up all of a commercial real estate transaction neither do people – a lot more now is being done by computers. We’ve moved beyond excel sheets into a new world of 3D modelling everything from fire safety risks to long term ROI modelling on asset class proportions in a multi-million square foot mixed use development. And now we can measure the value of that technology. Kumar says “The Valuation of Technology fills a critical void for those executives who wish to upgrade technology decision making from an art to a more definable science. Technology valuation has replaced risk management as the management approach to analyzing the profitability of current and future technology projects” including the application of technologies in commercial space. But says Singhe, for all the technology advocates will tell you technology must be seen as a solution for people, not a replacement for them.