Real estate investment managers are struggling to meet LP demands for increasing amounts of fund information as investors weigh their portfolios amid declining property markets.
In a survey of 50 investment professionals by data provider Resolve Technology, more than 80 percent said the frequency of demands for reports and information was higher now compared to a year ago.
Resolve said in a statement the survey showed that “companies are struggling to measure many of the key risk parameters in a timely manner. Tenant exposure is one of these parameters which most companies still measure on a quarterly basis or even less frequently.”
The survey, which interviewed private equity real estate fund managers as well as REIT executives, said that companies were experiencing difficulties in meeting demands from investors to project loan-to-value ratios and debt coverage service ratios as property values and projected income declines.
“Over a third of the respondents indicated it takes them several days or weeks to calculate future debt coverage service ratio for a portfolio of assets, and almost half of the respondents need that amount of time to calculate future debt coverage service ratios for their entire fund,” Resolve added.
Resolve chief executive officer Eric Forman added that with valuations declining and tenants defaulting on lease payments, debt ratios could be quickly out of compliance. “Companies managing commercial real estate investments in today's market want to be able to analyse and understand these metrics on a daily basis, not monthly or quarterly.”