If you were to survey small multifamily operators about what prevents them from growing their investment portfolios faster, the answer often centers around the availability (or lack thereof) of capital and internal systems. And yet, institutional real estate investors are sitting on billions of dry powder, suggesting there is no shortage of funding available for the “right operator.” What explains the disconnect? According to Colson Castilla, Co-Founder of real estate tech firm Ember Asset Management, a big part of the answer lies in the lack of asset management systems and professional reporting.
“While real estate capital is plentiful in theory, institutional investors will only deploy it to groups that can demonstrate they have organizational tools and personnel to consistently track, analyze, respond to, and summarize ever-changing property-level performance metrics,” says Castilla. The challenge is that even the best small and mid sized operators don’t have the resources to hire analytical staff or the internal technical expertise on how to create their own proprietary reporting system or implement an expensive new software like larger firms use. Rather they tend to rely on property manager reports and trying to sort through the endless pages of data to summarize the health of the asset in a meaningful way to their partners, investors, and senior lenders.
Institutional firms in contrast, are not only financially sophisticated but have in house analyst teams and substantial resources to spend on creating their own asset management reporting systems. Colson elaborated, “These are investment groups funded by endowments, pension funds, private equity, etc. They cannot justify investing capital in operators without formal asset management processes in place, and of equal importance, need to have confidence that these processes are transparent and translate to consistent, quality reporting back to them and their investors”.
The observation helps explain how small, nimble operators often disqualify themselves from being institutionally investible, even when they’ve shown remarkable returns on prior transactions. And while many operators would happily build out their infrastructure to accommodate growth, the upfront costs and time are often too prohibitive to justify.
Enter Ember Asset Management, a real estate technology company created by a team of real estate owners/operators who also come from an institutional asset management background. Their mission is providing asset management solutions to small and mid-sized operators to solve their biggest internal need. The company provides financial reporting, investor reporting, KPI’s, exit modeling, and other services to help operators save time and deliver professional reporting to investors and partners. Their ‘do it for me’ approach means they pull data from the property managers software (ex. Appfolio, Yardi, ResMan, etc.) and provide the operator with an automated monthly summary using the operators own brand and logo for a seamless deliverable.
Their proprietary platform also allows sponsors to identify opportunities on a deal or portfolio-level to optimize property performance and maximize NOI. “We believe asset management remains one of the most underserved segments in real estate. It’s incredibly expensive to build the infrastructure from scratch, and existing offerings are still too cost prohibitive or ‘do it yourself’ for many small operators. Our offering solves that pain point and allows operators to focus their time on acquisitions, growth and investor relations.
The company is uniquely positioned to help small and mid sized operators institutionalize their operations.
“Our platform is a culmination of years of experience owning and operating commercial assets, interacting with our investors, and understanding the challenges of the operator in today’s market. Our clients will get the benefit of a lot of expensive lessons learned along the way and hopefully accelerate their growth trajectory in a material way.”
For those interested in seeing a sample KPI report or scheduling a demo please visit www.ember-am.com