Strategic Real Estate Consultancy Flashcards
What types of consultancy advice have you provided to clients? Tell me about some of the recommendations which you have made to clients relating to their real estate
Whether developments are feasible or closed properties are still viable.
Strategic estate reviews on portfolios (rationalising the estate).
Feasibility of adding letting rooms to pubs.
Producing benchmarking report.
What are financial ratios, and how can they help determine the strength of a business
Financial ratios, such as Price/Earnings, Current Ratio (Current Assets/Current liabilities) and Gross Profit/EBITDA margin are used to 1. Track company performance
and 2. Make comparative judgments regarding company performance
For the portfolio of three properties, what factors lead to your conclusions in respect of the three properties?
The Head Office was far too developed for a Group of its size - we recommended a leaner structure.
Inconsistencies across the three properties in terms of offer and condition
Headcount/operational staff was too high, could find efficiencies in sharing staff across the three properties
Poor historical trading data made it difficult to accurately forecast - we had received management accounts in different formats and that did not consolidate with each other.
What advice did you give to your client regarding the portfolio of tenanted pubs?
After conducting research and producing a model analysing the sample of pubs, we found that rent covers ranged from 0.9-1.5x. Given we were in an extremely uncertain market, our advice was to be cautious in proceeding as the risk appeared to outweigh the upside.
Since this piece of work was carried out the company has announced financial difficulties relating to continuing as a going concern.
How does an operational and investment portfolio differ?
Well, operational portfolio requires a more hands on approach, requiring experience and knowledge of the sector. The income is more risky however you are exposed to more upside as a result.
Investment portfolios are simply receiving a rental income with no operational involvement in the underlying business. The income is contractually fixed and secure however upside is therefore limited
How do you ensure that a company’s real estate strategy is aligned with it’s wider motives and objectives?
Well, the focus of most real estate investors or companies at the moment is ESG. To ensure alignment with these objectives you would need to ensure you invest in new opportunities with good green credentials, as well as investing in the existing portfolio to bring properties in line with sustainability standards.
What is Real Estate Consutlancy to you?
Strategic real estate consultancy is essentially ensuring an organisation’s portfolio aligns with its strategy
Can you give an example on where you have helped a business align their portfolio with the company’s strategy?
I have worked on projects where we have conducted an estate review, and provided recommendations on either disposing, holding or acquiring assets to fit in with the company’s strategy.
