Real estate investors are going international at an ever-increasing rate. Capital from Asia and America is being invested in Europe, while European investors are similarly diversifying their portfolios on other continents. This presents significant problems for investment companies: if a fund product was created for a specific management structure, it’s hard to alter it after the fact. To keep offering their clients an optimised package in spite of this trend, more and more real estate firms have begun to divide up the value chain of their services among the various areas of fund management.
Dr Sven Olaf Eggers, Managing Director of PATRIZIA WohnInvest KAG, is adamant that both provider and client benefit from a modular structure. “We make sure that with PATRIZIA Immobilien, investors have a partner who can cover their needs.”
Platform administration, which comprises a wide range of functions, is one example of modular platform management: Each client can choose exactly the range of services desired, and they don’t have to pay for services they don’t need. Its most important components include property appraisals, fund bookkeeping, controlling for special funds, reporting to investors, risk management and compliance, and controlling for outsourced services.
With modular platform management, each client can choose exactly the range of services they need.
Digitalisation offers big advantages in terms of time and money
Without digitalisation, this kind of arrangement would hardly be cost-effective. But digitalisation is not yet established throughout the industry, despite the distinct advantages in terms of time and money over analogue systems, thanks to the easy automation of procedures.
Until a few years ago, for example, annual reports were often prepared as PowerPoint files. Importing external data was complicated and prone to errors. In the digital age, PATRIZIA Immobilien handles it all via an online portal. Data from external companies is processed immediately, so investors can access all the information they need with just a few clicks. They can download their funds’ reports shortly after the end of the month.
“At PATRIZIA, we process data internally practically in real time.”
Dr Sven Olaf Eggers, Managing Director of PATRIZIA WohnInvest KA
“At PATRIZIA,” Eggers explains, “we process data internally practically in real time, but converting files into the formats our clients prefer takes some time. That’s why we are providing twelve monthly reports, which is very close to real time, considering we are talking about real estate assets.”
Special requirements for other countries
Things get especially tricky when dealing with properties in other countries. Kenzo Capital Corporation in Japan, for example, was looking for a fund manager whose systems could deal with specific Japanese requirements. “That was very important to Kenzo,” Eggers recalls. That’s why PATRIZIA was able to acquire them as a new client in August 2017.
Acting for Kenzo, PATRIZIA set up a residential real estate fund with a target volume of 480 million to 550 million euros, with the intention of granting German institutional investors access to the Japanese market. The Kenzo Japan Real Estate Fund has already acquired four residential buildings in Tokyo. “Drawing on the experience of this collaboration of specialists – some of whom have known each other for more than a decade from the Japanese investment business – we plan to expand our fund administration even further,” Eggers says.
Fund management on modular platforms has many advantages, especially when it comes to saving time and money. This is practically impossible without digitalising internal procedures. And yet, international investors are increasingly demanding that service providers supply packages tailored precisely to their needs.