OneStream’s Flexibility Meets the Needs of Different Types of Real Estate Organizations

Real Estate Organizations can vary widely and range from small regional residential sales to multi-billion-dollar Asset Management companies and REIT’s. OneStream has unique capabilities that can help every type of Real Estate Organization meet its financial and operational reporting goals. For the purposes of this blog post, we have broken down the Real Estate Industry into the following categories recognizing that many organizations have needs across multiple categories. 

• Real Estate Brokerage and Sales 
• Property Management 
• Real Estate Asset Management 
• Real Estate Investment Trust (REIT) 

The section below outlines common metrics for each category as well as ways that OneStream can help improve both operational and financial reporting for these organizations. 

Real Estate Brokerage and Sales

These organizations are designed to help customers buy and sell residential and commercial real estate. 

Key Elements:

• Usually participate in both sales and leasing 
• Frequent use of franchise model 
• Commercial and/or residential 
• Technology plays a key role for larger organizations 
• P&L focus as they don’t own the properties they are selling 

Key Metrics:

• Average sale price by region 
• Average price per square foot by region 
• Average commission 
• Sold properties per available inventory ratios
• Year-over-year average comparisons (prices, commissions, etc.) 
• Number of days on the market 
• Percent difference between asking and selling price 
• Average rent price per property 
• Contract / closing rate 

Common Challenges: 

There is a heavy burden on finance and accounting resources to collect budget and forecast data. Data collection and consolidation of results for both operations and finance across all franchises and locations can be difficult to achieve. For Real Estate Brokerage and Sales organizations, having a common reporting language and methodology that accurately completes comparative reporting is a challenge.

Property Management

Property Management organizations deal directly with prospects and tenants. They handle all aspects of property operations including marketing, rent collection, maintenance and repair, evictions, etc.  

Key Elements:

• Focused on property operations including occupancy, revenue growth and expense reduction 
• Occupancy is critically important across sectors 
• Leverage data to determine supply and demand, rent prices, and predict vacancies 
• CapEx considerations to improve properties can be significant for Logistics and Office sectors, among others
• Rent roll concept is critical to bring lease timing and turnover into the planning process 

Key Metrics: 

• Average rent per property 
• Operating expense ratio 
• Occupancy and vacancy rates
• Rent ready costs (CapEx) 
• Average days to lease 
• Property management fees

Common Challenges: 

Property Management concepts vary significantly by sector and often have many different general ledger systems, and data collection from each property in the portfolio can be a challenge. They also need to be able to budget and forecast for the consolidated organization, but still maintain property level budgets and forecasts. CapEx considerations can have major implications for property and unit level analysis over time.  

Real Estate Asset Management

These organizations are designed to maximize the value and return on investment of a property. 

Key Elements: 

• In the business of buying, selling, and holding real estate investments 
• Often look to outside institutional investments to fund purchases 
• Large focus on balance sheet due to debt
• Often operate in multiple sectors for diversification 
• Cash flow projections are a critical component to budgeting and forecasting 
• Property management is often a factor for asset managers 

Key Metrics: 

• Return on investment (ROI)
• Internal rate of return (IRR) 
• Loan to value ratio (LTV) 
• Equity to value ratio 
• Funds from operations (FFO) 
• Capitalization rates
• Return by property / property type / region / sector / etc. 
• Property management metrics 

Common Challenges: 

Real Estate Asset Management organizations often have many different general ledger systems, and data collection from each property in the portfolio can be tough. There is a need to manage both short-term and long-range planning concepts for each property/portfolio and have the ability to quickly adjust long-range planning by property for changing market conditions. These organizations often work with external property management companies, which makes data collection a challenge. They also operate under a heavy calculation burden for concepts like same-store, debt fair value, and asset held for sale.

Real Estate Investment Trusts

Real Estate Investment Trusts are organizations that own, operate and/or finance income-generating real estate for investors. REIT’s have to abide by specific rules and regulations to qualify as a REIT. 

Key Elements: 

• Usually publicly traded, but can be private 
• Purchases funded by outside investment and debt 
• Often require complex consolidation functionality for variable entity ownership methods and percentages
• Large focus on balance sheet due to debt 
• Often operate in multiple sectors for diversification 
• Cash flow projections are a critical component to budgeting and forecasting 
• Property management often a factor for REITs 

Key Metrics: 

• Funds from operations (FFO) 
• REIT threshold testing 
• Debt to EBITDA ratio 
• Interest coverage 
• Capitalization rate
• Property management metrics 

Common Challenges: 

Real Estate Investment Trusts often have many different general ledger systems, which can make data collection from each property in the portfolio difficult.  These organizations operate under complex consolidation requirements including, the need for different ownership types and ownership percentages. The need to manage both short-term and long-range planning concepts for each property/portfolio also presents challenges for REITs. They often require data collection from multiple source systems to piece together the budget and forecast of the P&L and Balance Sheet (Cash Flow Projections + Debt + General Ledger). 

Additional Resources 

To learn more about the main challenges OneStream can help your real estate organization overcome and the value and benefits of leveraging a true cloud Corporate Performance Management (CPM) platform, review this helpful chart and download our Blueprint for Organizational Transformation.  

Please reach out to our Business Performance Management team if you have any questions.