Asset Management needs innovation:

Bring on the central database of insti-tutional real estate holdings in Germany!
Author Ingo Hartlief, Stellvertretender Sprecher der Geschäftsführung
CORPUS SIREO Holding GmbH
 

At the beginning of the process of working together with an investor, the asset manager is faced with the task of transferring newly acquired portfolios into existing systems or of creating new solutions for the management of such portfolios. However, would it not be better for investors and asset managers to risk a radical step in terms of data management in order to concentrate fully on the real estate portfolio right from the very beginning?

CORPUS SIREO has in recent years managed dozens of portfolios of domestic and international investors in Germany. Our experience has shown that, in the first few weeks after being engaged by the owner or another service provider, there is a considerable volume of work for transferring, processing and properly implementing the basic data or for transferring documents. One of the reasons for this situation are different software solutions for the management and customising of real estate holdings, hardly permitting any interchange of data. A further aspect is that different definitions or data and documents which are missing or which have been processed differently first have to be harmonised.

However, a consistent joint procedure could considerably reduce the volume of such work. Why would it therefore not be possible to create a central database for properties of institutional investors based in Germany, containing the master data and performance data as well as the documents relating to the portfolio and property history? The trick is to ensure that the relevant asset manager is approved for the portfolio to be managed, and has immediate access to the relevant data without having to become involved in the lengthy implementation process. Responsibility for continuously updating the data now lies with the new asset manager.

The way to such a database is certainly challenging. However, it eventually results mainly in advantages – also for the investor:

• Initially, investors have to be sufficiently confident to transfer sensitive data to a central data service provider. However, portfolio management systems and also CRM systems nowadays involve cloud-based solutions, and customers transfer confidential data and business relations to the corresponding service provider.
• The question regarding the operator of the central database is somewhat more complex: Should this be a commercial provider (see model IPD/MSCI for measuring the performance of institutional investors) or an association (ZIA transaction database)? A sector initiative of investors and asset managers is required in this respect.
• The one-off costs involved in processing the data in accordance with uniform standards must also not be underestimated. It is also necessary to create common acceptance of the definitions specified by the operator of the central database as a result of liaison with investors, asset managers and software providers.

Once the above issues have been processed, the investors will benefit from high quality or even greater quality of the asset management services. There will be an increase in the level of competition between the asset managers, because the process of changing service provider will become easier should the services of one service provider no longer be appropriate. Particularly as, in the case of a central database, a situation of dependency as a result of individualised systems and “specialist knowledge” is virtually no longer possible. Moreover, in view of the considerable reduction in the volume of implementation work, the asset manager is able to concentrate much more quickly on his core task, namely that of managing the real estate portfolio.