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Why You Should Outsource REIT Financial Operations in a High-interest Rate Environment
Real estate investment trusts (REIT) leverage capital to invest in different types of property. They source funds from numerous investors who do not have to purchase or oversee property themselves but can earn returns from these investments. Patterned after mutual funds, REITs park money in apartments, data centers, hotels, hospitals, offices, commercial spaces, warehouses, and mobile towers to name a few.
In a rising interest rate scenario like today, the value of bonds (including risk-free treasury bonds) declines, leading to a rise in their yield. Naturally then, investors are attracted towards such investments. Since REITs compete for new capital with bonds, savings accounts, and money market funds, higher interest rates mean declining investment flows and increase in the cost of funds for REITs.
No wonder REITs are looking for ways of optimizing operations in a tight liquidity environment. A KPMG Real Estate Fund Administration survey found that 47 percent of respondents cited the need to reduce costs and headcount as drivers. This creates a need to identify transformation partners who can help streamline operations and achieve strategic business goals.
How You Benefit from a Partnership
- Desire to focus on core real estate activities: REIT fund managers are realizing that their core responsibilities lie with their investors and any process that diverts them from these core activities can be better handled by transformation experts who have specialized knowledge. According to the KPMG survey, the primary driver for seeking operations partners, cited by 51% of respondents, is the desire to focus on core real estate activities.
- Undeniable cost savings: Third-party analysts help save on operational costs compared to onsite analysts. Less time spent on supervision, flexibility of support team, and a skilled team at their service round-the-clock increase savings in the long run.
- Better pricing of your services to clients: You can pass on the cost savings to your customers through lower pricing.
- Accelerated project completion: 24*7 operations from the partners’ support team ensures shorter turnaround time and more efficient delivery. In today's fast-paced business environment, agility is definitely a competitive advantage.
- Access to global expertise: Without the hassle of hiring, you will get a team of experts that are ready to be hit the ground running.
- Technology at your fingertips: Investing in Proptech is an expensive proposition but necessary. An experienced partner can help transform your business by providing the right Proptech tools that provide better complex data analysis and reporting.
Partnering with RRD
With more than 15 years of experience in transforming the operations of leading REIT companies, RRD GO Creative™'s future-proof and scalable solutions, proven methodologies, and dedicated teams can support your growth strategy.
Our solutions help you get at-a-glance view of asset performance using customized dashboards, accelerate output by adhering to accounting best practices, obtain high-quality lease abstraction data, and migrate data into any property management software.
Get in touch with me to know how we can transform your business and achieve all your strategic and operational goals: sampathkumaar.sridharam@rrd.com