Financial communication as a major challenge for real estate fund managers
Updated: Sep 16
Written by Sébastien Van Passel
4 Investors
The profession of real estate portfolio manager has been significantly impacted by the energy crisis and rising inflation since 2021. Consequently, many leaders in this sector have come to realize the importance of strengthening their relationships with their various stakeholders, including investors, tenants, brokers, and various suppliers. At the heart of this relationship are the Asset Managers, whose mission is reinforced by the significance of their role in the communication exchanged with their clients.
As consultants in Real Estate and Investment, these are the five central topics we have identified that are expected to continue driving discussions among professionals in the field of real estate fund management in the coming months:
1. Inflation Management :
Inflation has been a growing challenge since 2021, with effects on energy and raw material costs. Managers need to communicate how real estate can serve as a hedge against inflation through rent indexing, while also monitoring potentially negative impacts on the real estate market in the absence of salary increases and economic growth.
2. Attractive Real Yields :
In response to inflation, managers should communicate the need to strengthen portfolios with assets whose rental value increases over time. This entails explaining to investors that short-term yields may be lower, but medium and long-term appreciation is crucial.
3. Investment Diversification :
Diversification is a fundamental part of any investment strategy, helping to mitigate risks. Therefore, managers must
convince investors to diversify their portfolios by taking advantage of new opportunities in the market. This requires communication about the search for medium and long-term valuation opportunities, even if it means venturing into markets with high demand for assets. Such acquisitions may also sometimes necessitate strategic investments to make these properties attractive to the rental market.
4. Tenant Responses :
To cope with inflation, managers need to communicate the necessity of renegotiating terms with tenants, which can be challenging if significant rent increases are required. This underscores the importance of prior relationships with tenants and communication regarding the long-term lease management. Here, we also highlight the importance of anticipation and maintaining numerous contacts with tenants to better understand their current and future needs n order to offer concrete solutions with the aim of sustaining the relationship.
5. Evolution in Investor Perception :
Lastly, financial communication should aim to (sometimes) shift investors' perception regarding real estate by explaining that investment vehicles such as SCPIs, SICAVs, or REITs (e.g., Immobel (BE), Confinimmo (BE), Immobiliare Grande Distribuzione (IT), Unibail-Rodamco-Westfield (FR)) are not just income distribution products but also vehicles enabling long-term profitability. The goal is to convey that long-term performance may require asset adjustments and portfolio reallocations.
In summary, Asset Managers responsible for real estate portfolios face a significant challenge in financial communication with their stakeholders, addressing issues such as inflation, diversification, lease management, and changing investor perceptions to ensure attractive real returns over the long term.
External source :
Funds Magazine : "Quelles sont les adaptations des portefeuilles immobiliers pour aborder de multiples défis ?"