Portfolio vs. Investment Management

The term portfolio management is widely used throughout the commercial real estate industry. Investment management, while at the top of portfolio managers’ and CFO’s minds, is not a term you hear or see often.

There is a difference between managing a property or even a portfolio of properties and managing an investment. For the most part, investment management takes place “below the NOI line”. In addition to the performance of the properties, the myriad of factors that affect the investment include capital structure, refinancing options, buy and sell pricing and timing options, reserves and distributions…essentially all decisions that have an effect on profit and investment return.

Until recently, the real estate industry lacked the tools to support investment management. While a few of us would imagine operating our portfolios without a property management system, investment management is still predominantly done in Excel spreadsheets that are error-prone, difficult to manage, and create silos of information.

The reasons investment managers have turned to Excel to begin with is understandable. It is an easy place to throw the data that comes from a number of different sources such as asset management, accounting, and finance. Excel might have been a decent quick fix, but has outgrown the requirements of managing investments in today’s real estate environment.

As Josh Herrenkohl, Senior Manager in Ernst & Young’s Business Risk Services Group recently said:

“Modeling tools that were sufficient in the era of smaller funds are no longer sufficient and that the proliferation of new funds, combined with the prospect of lower returns, creates the need for new competitive advantages.”

Resolve has devoted years of research and development to building solutions that focus solely on the needs of investment management—automating and integrating processes that are commonly done today in separate Excel files. By integrating all investment-related data and providing managers with advanced analytical capabilities, decisions can be made based on up-to-date information and their impact on future returns.

Investment management can finally be performed with the appropriate tools of the trade. The real winners are the Portfolio Manager/ CFO and investors. Allowing senior management to be strategic and proactive, investment returns can best be maximized.