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Bringing more transparency to commercial real estate investing

Transparency. Accountability. Accessibility. These are all traits commercial real estate investors want, and they are qualities the best sponsors consistently display.

When investors and sponsors don’t see eye-to-eye on these crucial elements, it can lead to trouble. That lesson has come front-and-center here in North Carolina.

Pittenger Land Investments, the land investment firm founded by U.S. Congressman Robert Pittenger (R-N.C.), recently was the subject of a Charlotte Observer article that questioned whether his family’s company properly disclosed markups on land it purchased and then sold to investors who hoped to eventually flip the assets to developers. Some investors told the paper they didn’t know Pittenger sold them stakes at marked-up prices. The FBI is reportedly investigating the firm, though there have been no official allegations of any wrongdoing.

Pittenger Land Investments told the newspaper it has always fully complied with all rules and regulations. It also appears the firm disclosed the necessary information in documents sent to investors.

Why then are some investors still unhappy? I believe technology has changed our expectations. Investors now demand more information, with more context and at a faster pace than ever before. Conducting investor relations the same way it has always been done is no longer enough.

Granted, dust-ups such as the Pittenger dispute boil down to how much information was disclosed properly and how much relevant information was not shared. In Pittenger’s defense, many investors only hear (or read) what they want to hear. However, the debate serves as an important reminder that exceeding expectations with investor communications is paramount.

At our portfolio company Investor Management Services, we’re seeing more and more how important this issue can be. Our clients have told us the most valuable items we can provide are the tools to attract, engage and manage their investors in the 21st century.

Years ago, receiving a paper credit card statement in the mail was an appropriate and acceptable method of staying up-to-date on account balances. Keeping an investment prospectus in a filing cabinet for future reference was standard practice.

Today, any card issuer that only communicates with paper mailings won’t stand a chance in the marketplace. Very few people believe paper filings in a storage room are the best way to access investment records.

Customers now expect and demand real-time updates on their mobile phones. Transactions are documented instantaneously. Legal disclosures and investment details should be available from almost anywhere with a user name and password.

For commercial real estate professionals, this is a game changer, and frankly, we have been slow to adapt. Too often, paper statements with arcane language are mailed to investors with little other communication. That doesn’t cut it anymore. Investors want their real estate holdings and relationships to be as accessible and transparent as their online banking and brokerage accounts. They want all the available information at their fingertips, not just the required minimum mailed periodically in a legal document.

This shift is driving growth at our company. We have added new clients weekly, even in the traditionally slow summer months, and we’re investing in technology updates to deliver the tools sponsors need to provide a top-shelf experience for their investors.

IMS clients are sharing documents and disclosures with online investor portals, granting their investors access anytime and anywhere. Investors are monitoring investment dashboards to track performance. All parties can process transactions with the click of a mouse or the tap of a touchscreen.

In the modern economy, “We didn’t know,” is no longer a good excuse. The tools to manage investor-sponsor relationships are delivering transparency, accountability and accessibility we all should enjoy.


Robert J. Finlay is CEO of QuietStream Financial.

By Robert J. Finlay | Chief Executive Officer | QuietStream Financial

 

Market Report: Volatility Is Here To Stay

How many hits does it take to become unaffected by the blow? 

The global markets calmed a bit last week. However, that didn’t continue as this week opened with the Greek stock market plunging after five weeks of being closed. Additionally, commodities were hit again after China announced a slide in manufacturing. 

And, of course, U.S. equities opened lower on global concerns despite the strength in personal spending.

This week is sure to be a repeat of the roller coaster ride with everyone waiting for the latest jobs numbers due to be released on Tuesday.

So, to address my initial question: Can we absorb so many hits that we become unaffected by the blow? Never.  But an investing world dominated by the global economy, real-time information and electronic transactions is here to stay.  Volatility is becoming the norm.

Take a picture of rates and the current lending environment. Tomorrow will be different.


Nikki VascoBy Nikki Vasco | Chief Investment Officer | FullCapitalStack

Is your portfolio prepared for drive-thru grocery stores?

The retail grocery industry — a crucial commercial tenant — is facing a new disruptive force: Amazon.

The e-commerce giant has plans for a drive-thru grocery store in Sunnyvale, California, according to a report in the Silicon Valley Business Journal. If expanded, the concept could bring new turmoil to a retail grocery business already in upheaval from consolidation and changing consumer habits.

The Silicon Valley Business Journal reports a real estate developer there has submitted plans for a new 11,600-square-foot building and grocery pickup area. Amazon isn’t specifically named in building documents. However, the Silicon Valley Business Journal cites real estate sources who say Amazon is behind the project and plans a rollout of the concept that could eventually encompass multiple sites in Silicon Valley.

For several years, many companies, including Amazon’s AmazonFresh, have attempted to deliver groceries on a same-day or next-day schedule, to varying degrees of success. A common problem has been delivering fresh food to a doorstep and leaving it in a non-climate-controlled and unsecured environment.

Amazon’s drive-thru concept would be a step beyond its AmazonFresh grocery delivery service. With a drive-thru grocery location, customers could order online and pick-up in-person at a scheduled time. The concept could potentially bridge the convenience of grocery shopping online and the need to pick up food and keep it fresh.

“We are seeing the emergence of the next generation of the food distribution system,” says Bill Bishop, chief architect at Brick Meets Click, a retail and e-commerce consultancy, according to the SVBJ.

The exclusive report cites planning documents that include details of the proposed drive-thru grocery store. They include the following:

  • The concept would include both an online shopping platform and traditional brick-and-mortar retail.
  • Customers will pre-order grocery and other items, then choose a 15-minute to two-hour pickup window.
  • The building would be constructed as a warehouse and include loading stalls for eight cars.
  • Shoppers could also arrive on foot or via bicycle and shop inside the store.

Grocery stalwarts such as Wal-Mart and Safeway, among others, have been piloting and expanding curbside pickup for groceries ordered online. However, Amazon’s expertise in e-commerce and automated order-filling could seriously challenge those offerings.

If an Amazon drive-thru service proved successful and the company decides to embark on a major expansion, it could create numerous opportunities for commercial real estate developers and investors.  Of course, a successful neighborhood Amazon grocery drive-thru could also dent the profitability of traditional supermarkets and give their landlords and investors heartburn.

“It would put more competition on (traditional grocers) because now we have a new format,” Kirthi Kalyanam, director of the Retail Management Institute at Santa Clara University’s Leavey School of Business, told the Silicon Valley Business Journal. “Where the rubber is going to hit the road is: Can these new locations be more convenient to customers than a Safeway? If the answer is yes, There will be some restructuring in the grocery industry.”


Adam O'DanielBy Adam O’Daniel | Editor | QuietStream Financial Insights

 

4 Intriguing Ways Drones Will Remodel Commercial Real Estate

Aerial drones are replacing boots on the ground with technology in the air. Will commercial real estate see the same transformation?

The trend of accomplishing more and more with unmanned aerial vehicles presents both challenges and opportunities for owners and investors in commercial real estate.

While military applications have led the way so far, the drone explosion has prompted both large corporations and startups to venture into the private drone business. The use of drones for commercial purposes is expected to expand at a 19 percent compounded annual growth rate between now and 2020. Meanwhile, the Federal Aviation Administration is sorting through a host of issues sure to arise.

A drone flies near an office property.

A drone flies near an office property.

Already, drones have begun to change how commercial real estate owners and investors make decisions. Whether you’re an early adopter or fast follower, now is the time to understand what’s taking off. Here are four areas to watch:

Marketing: Interactive photo galleries and 360-degree virtual tours are old hat. The next trend in marketing properties is to hire a commercial drone to showcase from above. The idea is already catching on in Southern California, where high-end residential Realtors have used drone video to market estates. Expect striking commercial properties to be marketed in similar fashion.

Due Diligence: Inspecting a piece of property curbside gives investors one perspective. Viewing an asset from 100 feet in the sky is another. An investor conducting due diligence on a property hundreds of miles away can now hire a drone to survey the area. Could drone-conducted due diligence someday replace traditional site tours?

“Look at what Google Maps did to help people understand the location of a property. Drones present another clever new tool for analyzing real estate,” QuietStream Financial Chief Executive Robert Finlay says. “However, nothing replaces boots on the ground for due diligence. I’d much rather walk the property than see a drone video.”

Security: Drone surveillance? Not in my backyard. As drones proliferate, security will become a greater issue for commercial real estate operators — on both sides of the issue. Many large office properties use private security officers and video surveillance to monitor a property on the ground. In the future, it may prove cost effective to also secure an asset with an aerial presence. Likewise, property owners are sure to invest in systems designed to keep outsiders from peeping. If property lines are vertical, some owners will do their best to enforce those lines into the air.

Logistics: Amazon founder Jeff Bezos raised eyebrows when he claimed plans to one day deliver packages with drones. Today, the idea is nearing reality as small providers are already experimenting with drone deliveries. Commercial property developers and operators will need to consider how to accommodate commercial drones arriving with packages. Could we one day soon see commercial properties with reserved space for drone landings and drop-offs?

Massive tech disruption aims at commercial real estate

There can be no more excuses for falling behind the curve in adopting technology in commercial real estate. Ready or not, a major disruption is unfolding in our industry.

It’s no secret CRE professionals have been lukewarm to new technologies. Meanwhile, the rest of the world is accelerating adoption quickly, which is why CRE is now playing catch-up.

Tenants expect high-tech workspaces. Clients and prospects operate in a mobile-connected business environment. Even commercial real estate investors are being drawn to online investment portals and the insights provided by big data and analytics.

Now, new technology is enhancing how agents showcase yet-to-be-completed construction projects. A recent Wall Street Journal article explains how leasing agents for a Madison Avenue property are using virtual reality to showcase the end results of a $60 million renovation still underway.

“Agents for the 40-story office tower take visitors on a tour beneath custom-built canopies, where they can take in the lush greenery of trees and ornamental grasses and check out the outdoor conference area and wet bar. They can even peer over the glass-and-metal railing and catch a dizzying glimpse of the street below and a view of St. Patrick’s Cathedral across the way,” the article describes.

“Actually, the $6 million ‘Sky Lounge’ won’t be finished until next year, but Sage Realty Corp. isn’t letting construction hinder renting space in the 850,000-square-foot building. The leasing agents are simply giving virtual-reality tours: Each visitor sits in the marketing office, outfitted with headgear that is coupled with interactive 3-D modeling software.”

It’s one more example of customer desires to be ahead of the technology curve influencing a migration to new tools by real estate pros. It’s also opening the door wider for vendors to help solve the commercial real estate industry’s challenges. The technology referenced by the newspaper is offered by Floored Inc., a virtual-reality software and 3-D modeling firm.

“I think the truth is people recognize the speed of technological advancement is increasing,” David Eisenberg, chief executive and co-founder of Floored Inc., told the Journal. “A few years ago, if you only had 10 to 15 years left in your [real-estate] career you could ignore some of that stuff. Now people realize they are going to have to be practitioners of the technology.”

Disruption is already happening in several areas. Social media is changing how CRE firms market themselves. Cloud computing has helped numerous firms scale faster and become more efficient. Advanced analytics are making data more accessible and instructing professionals how to leverage it for growth.

“Inevitably, technology is going to change how we all do business,” QuietStream Financial CEO Robert Finlay says. “Virtual technology is just one more example of the disruption coming to commercial real estate.”

A 2015 study from Deloitte lists technology and automation among the most influential forces in the industry. Mobility, smart building technology, data and analytics and related technologies are all forcing major shifts.

Deloitte’s 2015 Commercial Real Estate Outlook polled 1,100 commercial real estate professionals and found 69 percent believe technology will transform their business this year or next.

“Adopting more advanced technology is rapidly becoming an imperative in CRE,” says the Deloitte study. “Ultimately, CRE companies need to be progressively aware of new advancements in technology, and anticipate and step up adoption on a regular basis.”