Asset Managers Leverage AI to Navigate the Complex CRE Market

Asset Managers have to face the challenges of the market head-on, but they don't have to go it alone. Discover how Prophia is resolving many of the obstacles AMs face every day while setting them up for success in a challenging market.

Asset managers play a pivotal role in commercial real estate, balancing diverse responsibilities to optimize property performance. Unlike property management, which primarily focuses on operations, Asset Managers must adopt a more strategic perspective. Their goals include maximizing profitability, minimizing vacancy, ensuring timely project completion, and aligning property performance with investor expectations.

These tasks are inherently complex, even in stable markets. However, the current market's volatility, characterized by economic uncertainty, interest rate fluctuations, and shifting tenant demands, has significantly amplified the challenges Asset Managers face within their roles.

Fortunately, advanced technological solutions can provide invaluable support. Tools like Prophia offer Asset Managers a comprehensive suite of capabilities to streamline their strategic initiatives, including enhancing communication with investors, facilitating efficient financial oversight, optimizing asset performance, and bolstering leasing efforts.

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Daily & Quarterly Responsibilities of Asset Managers
Asset Managers Discuss CRE Challenges
Putting an End to Asset Management Challenges With AI

Daily and Quarterly Responsibilities of Asset Managers

An Asset Manager’s role encompasses many responsibilities and success metrics can vary based on the growth goals of an organization. By and large, however, AMs focus on strategic initiatives, analyze revenue and support leasing efforts.

• Driving leasing and decreasing the number of vacancies or exposure on an asset is very important to AMs. This requires them to work closely with individuals on the leasing team, brokers, legal professionals, as well as property managers who oversee operations and keep tenants happy.
• Managing rent roll and rent collection, greenlighting restorative or upgrade projects, and acting on investor goals places AMs at the center of all strategic initiatives and privy to important financial information.
• Analyzing asset revenue also falls under the Asset Manager umbrella. In addition to being strategic thinkers, AMs are also data wizards. It’s up to them to dig into the financials and cash flow of a given asset or group of assets, interpret everything they uncover, and convey that to ownership groups.
• Collaboration with everybody—and we mean everybody. As the overseers of important projects, financials, and investor goals, Asset Managers have to be the arbiters of complex figures and skilled communicators to keep the strategic gears turning.

Asset Managers Discuss Industry Challenges

Asset managers prioritize strategic portfolio performance, but daily and quarterly challenges can significantly impact their success. While individual challenges may seem minor, the cumulative effect can be detrimental. Even a single lease data error can have a substantial impact on asset performance.

Challenge: Getting a Clear Financial Picture

The financial picture of an asset or group of assets is the key to managing profitability. This can be challenging with even the most organized dataset but, more often than not, important financial information is scattered across spreadsheets or sorted in a dated filing system. Suddenly, understanding the latest earnings turns into a fire drill.

Challenge: Supporting Leasing and Boosting Profit

Improving an asset's performance can be difficult for a number of reasons. For one market conditions, like slowed leasing or low tenant demand, can impact an Asset Manager's ability to manage vacancies. High vacancies, in turn, put a financial strain on a property.

Additionally, when variable costs for servicing a building go up (which they have) this makes daily operations more expensive and hard to finance. The number of TIs can also impact property cash flow and prevent Asset Managers from meeting the financial goals of investors and JV partners.

Challenge: Uncovering Important Lease Terms

Lease language plays a pivotal role in asset management. It allows property owners to establish favorable terms for new tenants and clarify fee responsibilities. However, when leases are scattered across various locations and formats, identifying patterns and previously agreed-upon terms becomes challenging, hindering the lease drafting process and potentially exposing property owners to financial risks.

We had a tenant vacating. Our team thought restoration rights were one way and the lease described them another way. In the end, Prophia helped us save a significant amount of money. We may have missed the nuance of this right without it.

Joe Durfee, Lionstone, Asset Management

Challenge: Unifying Teams & Property Vendors

Strategic Thinking and Reliable Data: Keys to Effective Asset Management

Asset management requires a strategic approach and access to reliable data. While AMs face numerous daily and quarterly challenges, having accessible and trustworthy data is crucial for impacting asset performance. Prophia's AI empowers CRE professionals to address multiple challenges simultaneously, providing the confidence and accuracy needed for success.

Lease Abstraction

Leases are a treasure trove of information for CRE professionals. They inform negotiations, protect landlords and tenants, inform leasing decisions, and define rights and responsibilities. However, manually summarizing and abstracting lease documents can be time-consuming and error-prone.

"I have been using Prophia for about 3 years now," says Michael Oster, an Asset Manager at Spear Street, "Throughout that time, I have always leased with Prophia in the background." Prophia's AI streamlines lease analysis by automatically extracting key terms. This empowers asset managers with actionable insights to optimize decision-making, risk mitigation, and lease performance.

Investor Reporting & Rent Roll Automation

Manual reporting is time-consuming and prone to errors, just like manual lease abstraction. But accurate and timely reporting is essential for building investor confidence and enabling AMs to focus on strategic initiatives that drive portfolio performance.

Prophia's AI eliminates the need for manual data aggregation. The platform automatically pulls critical tenant information and property metrics into reports at the asset and portfolio levels. This includes automated rent roll reports that accurately capture every rent step and the Deals Report, which provides a historical ledger of previous deals and executed leasing activity.

Smart Search

Prophia's smart search is a powerful tool that many asset managers overlook. By enabling direct searches within Prophia-synthesized leases, it saves countless hours of manual searching and streamlines the lease review process.

Imagine conducting a Google search within your lease documents. With Prophia's smart search, you can quickly find specific terms like "Base Year" across multiple leases or buildings. This feature is especially valuable for asset managers who need to analyze lease terms, identify contractual obligations, or assess risk exposure.

Prophia has improved our speed when it comes to getting critical information. You could always test your luck with Ctrl F, but that isn't always reliable. With Prophia verifying information takes about 15 minutes and it's accurate.

Michael Oster, Spear Street, Asset Management

By eliminating the need for manual searching and providing instant access to relevant information, Prophia's smart search empowers asset managers to make more informed decisions, improve efficiency, and reduce the risk of errors.

Encumbrance Tracking

Prophia's AI meticulously analyzes uploaded lease documents to extract essential information, including dates, figures, and key terms. This data is then organized into clear tenant summaries and integrated into the dynamic stacking plan and reports, offering a comprehensive overview of property encumbrances.

As lease terms change, Prophia provides real-time insights into future property exposure. This data-driven approach empowers asset managers to communicate lease details effectively, prepare for renewal negotiations, and proactively mitigate risks.

Collaboration

With unlimited users and a streamlined interface, all Prophia users, whether they work in asset management, leasing, or investment and acquisitions, can effectively collaborate and work from the same, trusted tenant and property data.

For Jeff Toporak, Co-Founder of FD Stonewater, Prophia has allowed his team to effectively collaborate with individuals outside of his organization, "When we look to sell an asset, first we give that information to the broker we want to hire, using Prophia, we know they’re getting perfected information."

Whether working with a third-party brokerage, legal professionals, or even a property management team, Prophia keeps information consistent across assets and ensures seamless knowledge sharing as well as protection of intellectual capital as teams shift.

For the CRE Strategists

Asset Managers play a pivotal role in executing critical strategic initiatives for real estate portfolios. Their expertise spans all facets of performance, including property income optimization, occupancy rate management, and strategic leasing decisions. As the architects of asset strategy, these professionals rely heavily on comprehensive property and tenant data to achieve success and meet the ambitious goals set by investors and property owners.

As the commercial real estate industry emerges from a period of subdued leasing and acquisition activity, industry leaders are increasingly turning to innovative solutions. These cutting-edge approaches aim to enhance process efficiency and maximize the potential of every investment opportunity.

Prophia's AI-powered features offer Asset Managers a transformative toolkit to streamline their day-to-day administrative responsibilities. By harnessing these advanced technologies, Asset Managers can automate routine tasks, free up time for strategic decision-making, gain deeper insights from complex data sets, and improve forecasting accuracy for better long-term planning.

This technological edge empowers Asset Managers to drive significant financial impact, not just in the immediate term, but for months and years to come. By embracing these AI-driven solutions, Asset Managers can position themselves at the forefront of the industry's technological revolution, ensuring sustained success in an increasingly competitive market.