Commercial real estate lending is a high-stakes world with big rewards – 16 trillion dollars of CRE value for 2018, in the U.S. alone. But every finance professional understands the direct relationship between risk and return. In order to prevent data loss, avoid missed opportunities and efficiently scale your business, you need a system that manages the entire life cycle of your investments. What does it mean to become technology-enabled, and exactly what should you look for when selecting a software to manage your portfolio of debt and equity investments?
Why do you even need CRE asset management software? After all, don’t homegrown databases and highly customized Excel models do the job?
The Problem with ONLY Using Spreadsheets
Excel is vital to the workflow of CRE investors, lenders and servicers. But spreadsheets have limitations, including the amount of effort it takes to maintain proper controls, the fact that they are prone to human error and that they tend to break when handling large data sets. Additionally, without a layer of business intelligence or the computing power of a database, you’re constantly searching for the answers instead of getting them delivered to you. This makes it more likely you’ll have to scramble when a good opportunity presents itself. Instead of being proactive, you’ll need to be reactive, which is stressful and can lead to rushed decisions with serious consequences for your investors, management or clients.
So, while spreadsheets were once the only resource for CRE professionals, technology has changed that. But good news, Excel lovers: you don’t have to ditch your formulas and customized models when you migrate to a software. Your software shouldn’t replace the existing workbooks and reports that you’ve worked so hard to build. It should use them. Choose software that integrates tightly with Excel, so you can realize the best of both worlds and truly make your dream system a reality.
What CRE Software Can Do with Data
CRE companies have access to vast amounts of data, but all of this valuable information tends to be fragmented. It exists in semi-structured or unstructured formats and lives in isolated applications, departments and personnel. But technology can help to standardize your data – instead of keeping data sources siloed from one another, CRE software aggregates, organizes and structures it for an apples-to-apples analysis.
Without technology, it can be challenging to draw clear and actionable insights from your data for better and faster decision making. That’s why cloud-based CRE asset management software is critical to unlocking valuable data, which is accretive to staying competitive and driving business strategies.
CRE Asset Management Software: 5 Essentials
1. Support the Entire Loan Lifecycle
CRE asset management software needs to support you from start to finish. The last thing you want is to have to use and maintain multiple unique systems, one for each of the different groups and their individual responsibilities.
Your software must provide full lifecycle support including:
- Asset Management
2. Handle Any Type of CRE Product
Any asset management system can deal with simple, plain vanilla loan structures. But when it comes to unique vehicles like CRE CLOs or highly bespoke transitional products like bridge and construction loans, those inflexible systems fall short. If your software can’t handle the complex deals, is it really helping you?
Your software should be able to support the following and more:
- Balance sheet
- Bridge & Construction
- CMBS & Agency
- Warehouse and Repo
- CRE CLO
- Equity & Pref Equity
3. Support Any Type of CRE Lender
The CRE process can look different depending on what type of platform you’re operating, while giving you the flexibility to change your products with the market. You don’t want to have to buy and then learn an entirely new system if your focus or products change and evolve. This means you need software that is nimble and spans across all loan types and can adapt with your business model and lending program.
Good CRE software should be able to support:
- Private Equity & Funds
- Insurance, REITS & Asset Managers
- Owners, Operators & Sponsors
- B-piece Investors & Special Servicers
4. Accessible on Any Device, Any Time
Many organizations shy away from CRE asset management software purely because of IT investment hurdles. That’s why you should look for a software that checks all your security and regulatory boxes while also fitting nicely with your greater IT goals.
A cloud-based solution means there will be no hardware to buy and install, nothing for IT to maintain and no limits on where, when and how you work. Thanks to this capability, you’ll never miss a chance to take advantage of opportunities quickly as they turn up.
5. Real Efficiencies
The point of software is to automate processes and unlock insights in ways that weren’t possible without that technology. But if your software is still making you do the heavy lifting, then it’s not doing its job.
Traditional tools rely on you to mine your own data for business intelligence. Doesn’t this sound like the same problem you were dealing with before with siloed, static spreadsheets? Your software must go beyond just giving you access to your data: it should make meaningful connections based on the data and deliver actionable insights to things that really matter to you given the context of your investments and portfolios.
CRE asset management software helps CRE professionals centralize data, add power and depth to your Excel models and bring structure and transparency to the asset management workflow. If you’re still relying on ONLY Excel, spending significant time searching for data or playing catch up – it might be time to invest in CRE asset management technology.