As the complexity of commercial real estate deals has increased, so too has the realization that a professional with an eye on local and macroeconomic trends is needed: an asset manager. This strategic thinker possesses the mindset and skill set to manage and mitigate risk, engineer cash flows, and collaborate closely with property managers to boost values of properties and portfolios.
Asset management professionals draw from a range of disciplines, including brokerage, property management, business, economics, finance, and accounting. In addition, they serve all sectors and levels, from sole proprietors to Wall Street portfolio managers. As a result, the asset manager role is shrouded in an unnecessary layer of confusion.
“The work of an asset manager is not new,” says Blaze L. Cambruzzi, partner at Pennsylvania-based True Commercial Real Estate, “but the concept of a professional doing it may be what’s new.”
The asset management role has its roots in 1980s tax reform and post 9/11, when low interest rates pushed fixed-income investment into mortgage-backed securities, says Cambruzzi. A self-described “data analytics personality” and real estate professional with commercial brokerage and acquisitions experience, Cambruzzi left his position when the 2008–09 financial crisis hit, earning a master’s degree in real estate financing and focusing on where the industry was headed. Paradoxically, he observes, many real estate master’s programs are under the school of architecture despite a major industry pivot: the placement of capital directly for investment not from real estate developers and construction firms but from Wall Street equity and debt. “You need a different model and approach - above and beyond the property manager — to sustain that,” says Cambruzzi, who also holds a master’s in business administration, “and that is at the asset management level.”
An asset manager brings a level of engagement to a property that exceeds what one would consider typical for a property manager collecting rents, paying the bills, and administering leases. For example, a property manager might see a tenant and property coming up for renewal and simply sign the tenant to another five-year term. “As an asset manager, I have to look at a loan coming due in 2023–24. If I take this five-year lease, that term will come due six months after my refinance, so when I go for refinancing, I might not get the best rate. Also, I have a bump scheduled for a year after I refinance. If I can move that bump up a year, that’s when the appraisal will happen and the bank determines the building’s value, and that’s to our benefit.”
From Renee Savage’s vantage point, the asset manager is the analytical problem solver. Savage, CPM, CCIM, is secretary treasurer for the Institute of Real Estate Management and president of San Diego–based Casavida, a property management company with a portfolio of boutique residential properties. A property manager looks at the one- to three-year time frame on a property, she says, while the asset manager is looking at five-plus years. “It’s a different lens,” acknowledges Savage. While she delineates the roles, Savage does not discount the property manager role, “because the property manager can make or break the asset manager’s success, and part of that asset manager’s role is to explain the long game.”
Savage describes herself as “more on the operational asset manager side, that step above the property manager.” She analyzes capital improvement projects—will they create value or maintain the asset at its current value?—and ensures that rental rates are properly set and the property manager is controlling expenses.