How do leading CRE investors manage their debt portfolios?

Debt management is a critical area for compliance and performance, though typically it requires a partner that offers the necessary technology infrastructure along with deep domain expertise and complete operational support. Institutional real estate investment managers need to accurately capture terms critical to reporting and forecasting, as well as key date or event performance, and covenant compliance — areas that asset management or accounting groups likely emphasize. Other teams, such as capital markets and valuations, will focus on different areas of debt, including prepayment or refinance scenario analysis, lender relationship management, debt origination pipeline management, and fair valuing debt either to strike an NAV or for specific investor reporting requirements.

Leveraging the administrative and operational support of real estate debt specialists who extract, populate, maintain, and quality control data in a purpose-built system creates operational efficiency while mitigating risks. Even within the realm of CRE debt experts, institutional real estate investors lean on sub-specialists with deep expertise in specific areas to apply the industry’s best practices in the context of their organization’s structure and culture, crafting the most efficient and effective workflows around debt.

CRE investors manage debt, from origination to maturity or prepayment, such that all stakeholders have easy access to bespoke reports, analysis, documentation, payment calculations, key dates, and other important loan terms. Smoothly integrated technology and advisory support facilitate and streamline workflows such as debt origination, covenant compliance, and debt valuation. The trend among the largest real estate investment managers is to integrate their debt management solution, typically via an API, with portfolio systems or data lakes so they can capitalize on debt data (terms, metrics, and analysis) at the enterprise level. Tailored implementation allows debt data to be further mined in the debt management user interface as well as user-defined reports and analytics.

Outside of particular loan compliance, top CRE investors place a premium on having robust lender relationship tracking, with the best practice being to track current and historical total commitments and outstanding principal, as well as win/loss record of debt bid.

As is often the case with data and technology, debt management needs and use cases are constantly evolving. For a business to run lean, and for teams to focus on their core competencies, CRE investors need a time-tested partner whose technology and consultant support continually evolve and anticipate new challenges and needs in the market.