How do you report commercial real estate asset performance?

1 Define your objectives

The first step in reporting commercial real estate asset performance is to define your objectives and expectations for each property. What are your short-term and long-term goals, such as cash flow, appreciation, occupancy, or sustainability? How do you align your objectives with the market conditions, the tenant demand, and the asset strategy? How do you track and evaluate your progress and performance against your objectives? By answering these questions, you can establish a clear and consistent framework for reporting your asset performance.

2 Choose your metrics

The next step is to choose the metrics that best reflect your asset performance and your objectives. There are many different metrics that can be used to measure and compare commercial real estate assets, such as net operating income (NOI), capitalization rate (cap rate), internal rate of return (IRR), cash-on-cash return, net present value (NPV), debt service coverage ratio (DSCR), loan-to-value ratio (LTV), occupancy rate, rent growth, and tenant retention. Depending on the type, location, and stage of your asset, some metrics may be more relevant and meaningful than others. You should also consider the frequency, accuracy, and source of your data, and how to adjust your metrics for factors such as inflation, depreciation, taxes, and fees.

3 Use standard formats

Using standard formats and templates for reporting asset performance is the third step, which will help to present data in a clear, concise, and consistent way while complying with industry standards and best practices. Examples of these formats and templates include a property income statement that shows revenue and expenses over a period of time, as well as the NOI; a property valuation that shows the estimated market value based on various methods, such as the income approach, sales comparison approach, or cost approach; a property cash flow that displays cash inflows and outflows over a period of time, with the cash-on-cash return ratio included; and a property performance analysis that shows key performance indicators (KPIs) over a period of time, with variances between the actual and the budgeted or projected performance. Some common KPIs include occupancy rate, rent growth, tenant retention, operating expense ratio, and capital expenditure ratio.

4 Add your insights

The fourth step is to incorporate your insights and recommendations into asset performance reports. This will help you to convey your value proposition, competitive edge, and future plans to stakeholders. You should also emphasize your successes, difficulties, and prospects, as well as how you plan to tackle them. Your asset performance reports should answer questions such as how your asset performed in the past period compared to objectives, peers, and the market; what were the main drivers and factors that impacted your asset performance; what risks and uncertainties may affect your asset performance in the future; and what opportunities and strategies are you pursuing or considering to boost asset performance in the future with expected outcomes and benefits.

5 Seek feedback

The final step is to seek feedback from your stakeholders on your asset performance reports. This will help to enhance reporting skills, build trust, and foster collaboration. You should be open to suggestions, questions, and constructive criticism, responding promptly and professionally. Ways to seek feedback include surveys and polls, meetings and presentations, and reviews and audits. By following these steps, you can create effective and informative reports that demonstrate asset performance and asset management capabilities.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?