Panellists onstage at PERE’s Investor Forum in Amsterdam reiterated how one of the most important facets in private real estate money-manager dynamic was immediate access for the investor.
A panel session at the Forum, in Amsterdam, titled ‘Examining the investor –manager relationship’ put that high in a list of investor wants.
On the panel along with moderator Indeesh Tangeraas, senior investment director at Cambridge Associates, were Daniel Gorzawski, managing director of Harrison Street Real Estate; Catherine Hong, executive director at Morgan Stanley; Witsard Schaper, CPPIB’s director of real estate investments; and Sophie van Ooesterom, chief investment officer EMEA at CBRE Global Investors.
“It’s very important to have access to the managers at all times, whether that is through email, phone or in person,” Schaper said, adding: “managers should be sharing everything with the investors, minus sensitive corporate material. It is the investor’s money, so they have the right to know.”
But Schaper also suggested that keeping a limit on the amount of investment managers a given investor is working with. ““We like to invest with partners that can take more capital, essentially commit more but with fewer partners so we can monitor capital more efficiently,” he added.
However, for Hong and Gorzawski, transparency was the key to earning the trust of investors.
“We want long-term relationships with these investors so creating that trust early and over the relationship is vital,” said Gorzawski.
“At an AGM, there shouldn’t be any surprises for investors in a given quarterly report if the communication between money and manager is good,” said Hong.” They are usually a great opportunity to meet investors and talk to them about the funds or assets, I really value those investor-only times.”
For van Ooesterom, it is a two-way street, investment managers should know what is expected of them and investor should know where their direct involvement begins and ends. “There should be a constant dialogue so we know what responsibilities they want themselves and what they expect from us,” she said.
“Some investors believe they should not be involved in decision-making, they have underwritten the investment manager to make those decisions,” added van Ooesterom.
One delegate at the conference asked the panel if they had seen a tendency from investors to cut out the manager, potentially saving fees.
“In 2007/08,” said van Ooesterom. “there was a trend for bigger investors to align to the operating partners directly. I find that it goes in cycles, sometimes it’s hard to find precise alignment with an operating partner on the ground,” she added.
“One thing we are doing is telling investors that we can be the operating partner because we have our own asset management business, we specialize in retail, so we’re not just a ‘box-ticking’ partner but we can do the work on the ground too,” van Ooesterom said.
Schaper rounded off the panel session by suggested that any forthcoming cyclical conclusion would answer a lot of unanswered questions. “We are getting closer and closer to that final stage of the cycle, no one has a crystal ball, but there is still a lot to be tested and when liquidity falls away, which it will do, how will the fund structures and fund documents survive?” he said.