04/18/23

MSc Real Estate Management REM 05 (am)

Introduction and some basic definitions

Tuesday, April 18, 2023 www.henley.reading.ac.uk

Dr. Ashley J Dabson

Introduction Profile Ashley Dabson

PhD, MSc, Dip (Est. Man) FRICS, FRTPI, MCMI, MBIFM

Dr Ashley Dabson commenced his corporate career after studying at MIT as a Fulbright Scholar in the late 70’s. He has extensive experience of corporate property and facility management. He has specific knowledge and experience in the Information Technology and Telecommunications industries.

  During the 30 years in which he worked in the commercial sector he directed both an

intelligent building consultancy and headed the property and facility functions in several public companies including Digital Equipment Company and Compaq Computers. (Both now part of Hewlett Packard). He was then appointed Director of International Property and Facilities at MCI WorldCom being responsible for the property portfolio and all of the real estate and facilities staff throughout Europe and Asia Pacific.

Since April 2004 he has worked independently specialising in education, corporate training and consultancy. He has worked in a number of countries for clients in the public, private and charitable sectors.

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The structure of the module

AM sessions 11:00am to 13:00pm MSc only Landlord view point Investment view point

PM sessions 14:00pm to 16:00pm MSc & Year 3 BSc Tenant view point Occupier view point

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Learning Outcomes

Apply management concepts to the business of real estate

Critically assess how real estate management can add value

Conceptualise key issues facing real estate mangers

Evaluate how these issues impact on practice in different sectors and from different perspectives.

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Teaching and Learning

Total 40 hours (max) face to face contact Form:

Lectures Seminars

One three hour examination Answer three (3) from six (6) questions

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Topics covered in the am sessions

Investor strategies Performance measurement Active asset management Property Management Landlord and tenant relationships Service charges Governance

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Topics covered in the pm sessions

The future of work – the portfolio impact Corporate portfolio management strategy The service ethos Lease v buy Facilities management Public sector portfolio management The changing nature of RE management

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Definitions & the management issue

Management Asset management Property management Facilities management The new management issues

Management - some definitions

Mary Parker Follett - “Management is the art of getting things done through people”.

George R. Terry - “Management is a distinct process consisting of planning, organising, actuating and controlling performed to determine and accomplish the objectives by the use of people and resources”.

William Spriegel - “Management is that function of an enterprise which concerns itself with the direction and control of the various activities to attain the business objectives”.

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What is management?

Concerned with matters occurring between the main decision-making structures and the performance of the operational task Control of devolved responsibility

Budgets, business plans, targets and variance Policies, procedures, processes and systems Personnel, skills, appraisal and development

Communication between stakeholders Attainment and accomplishment of objectives

Getting things that need to be done, done!

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In the RE sector nothing is clear!

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Strategic

Operational

FM

IM

REIM

PM

IPM

AM

Investment Corporate

IM Investment managementREIM Real estate investment managementIPM Investment portfolio management AM Asset managementPM Property managementFM Facilities management

Asset management (AM) is a term often used to mean investment management (IM)

Asset management (AM) is a term often used to mean facility assets (e.g. equipment)

Asset management (AM) is a term often used to mean Property management (PM)

Defining asset management

Asset management is: 1. The management of various investments and

assets to increase their market value and/or produce the highest returns commensurate with acceptable risks.

2. The process of ensuring that a company's assets are maintained, accounted for, and put to their most productive use commensurate with acceptable risks.

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Asset management (definition 1)

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Property portfolio

investment

Establishportfolio

goals

Establishportfolio

goals

Determine risk

Determine risk

Construct Portfolio

Construct Portfolio

Ongoing portfolio

management

Ongoing portfolio

management

Set asset allocation

policies

Set asset allocation

policies

Managing the property as an investment for capital appreciation and or income generation

Managing property as part of an investment portfolio means that it may be considered as an aspect of investment portfolio management

Asset management (definition 2)

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Create/acquire Utilise Renew/disposeMaintain

Capital investment optimisation and sustainability planning

Organisational strategic goals

Sustained performance

cost & risk optimisation

Optimise life cycle activities

Manage asset portfolio

Manage asset systems

Corporate management

Manage assets

BS PAS 55 (2008) Asset management system

Typical priorities & concerns

BSI & Institute of Asset Management

Managing the property as an investment

for operational advantage

Asset management in the hierarchy

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Property ManagementProperty Management

Facilities ManagementFacilities Management

Customer (Tenant and/or Occupier)

Investment market

Operational PortfolioInvestment Portfolio

Investment Portfolio Management Operational Portfolio Management

Asset Management

Asset Management(1) (2)

---- and the investment income security!

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All Property and Sectors A move away from the traditional offices and retail?

What about the management?

Is the growth in management a problem or an opportunity?

BPF IPD Annual Lease Review 2012

Defining property management

Overall definition The process of managing a property by handling all

of the activities that that relate to it; a. The owners definition

Are those activities above that involve the ownership life cycle of a piece of real estate it may involve collecting rent, service charges, and sums for other real estate related activities such as maintenance and security.

b. The occupiers definition Are those activities above that involve the occupancy life cycle

of a piece of real estate it may involve paying rent, service charges, and sums for other real estate services and often includes insurance and maintenance.

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Property management Strategic dimensions

Alignment with corporate goals Portfolio balance, value, development Sectoral, economic and property trends Interface with company financial objectives – balance

sheet assets, implications for loans and gearing. Operational dimensions

Enhancing or maintaining the operational/market value of the property

Lease renewals, rent reviews Notices, negotiations, arbitrations Maintenance and day to day operations.

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Property management objectives V

alu

e

Years

Obsolescence

Depreciation

Rent profile with limited intervention

Rent profile with property management

Rent profile without intervention

Economic life of the building

3. Extend operational life

2. Retain property value

1. Maintain operational value

Extended economic life of the building

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A current definition of facilities management

BIFM has formally adopted the definition of FM provided by CEN the European Committee for Standardisation (and ratified by BSI British Standards): “Facilities management is the integration of processes

within an organisation to maintain and develop the agreed services which support and improve the effectiveness of its primary activities”. 

Facilities management encompasses multi-disciplinary activities within a defined environment and the management of the interface between people and place.

Horizontally bundled services

Facilities management activities

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Managerial(white collar)

Value added services & technologies

Property portfolio & facilities planning

Multi-site integrated management & reporting

Property & other asset life cycle management

Environmental management

Relocation & programme management

Facilities/equipment monitoring & reporting

Service desk Service desk management

Operational management

Staff/contractor management & budgetary control

Operational(blue collar)

Service Delivery

Soft FMCleaningLaundryCateringSecurity

TransportCourier

ReprographicPest control

Grounds

Hard FMM&E maintenanceUPS & generators

HVACGas services

Fire & securityBuilding fabric maintenance

Plumbing

Environmental Services

WaterWastePower

Health & safetyCommuting

Ver

tical

ly b

undl

ed

serv

ices

Inte

grat

ed s

ervi

ces

Ser

vice

man

agem

ent

Source: Based on FM Index FM World Feb 2009

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The traditional RE management hierarchy

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Focus Investment

Value

Market Compressed

Yields

Property ManagementProperty Management

Asset Management

Asset Management

Facilities Management

Customer (Tenant and/or Occupier)

Investment market

Confrontational Collaborative Confrontational

Are we at this point yet or are we back to the traditional?

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Focus Investment

Income

Market Softening

YieldsAsset

ManagementAsset

Management

Facilities & Property ManagementFacilities & Property Management

Investment market

Customer (Tenant and/or Occupier) Collaborative Collaborative

CollaborativeCollaborative

The management scope issue

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Non- operational

Portfolio

Core Portfolio(functional obsolescence risks)

Third

Portfo

lio

(non

-coh

esion

risk

s)

Peripheral Portfolio

(inflexibility/low utilization risks)

Alienated Portfolio

(default risks) Vacan

t Por

tfolio

( voi

d ris

ks)

OperationalPortfolio

Corporate Real Estate Costs Low

CorporateReal EstateCosts High

The total portfolio needs management Core Peripheral Convenience Vacant Alienated

The traditional RE approach will no longer be sufficient!

This applies to: Asset management

Investment Operational

Property management Owner Occupier

Facilities management

Know Your Portfolio Costs and Benefits

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Third Portfolio

Vacant Portfolio

Operational portfolio

Alienated Portfolio

Low

Low

High

High Cost

Ben

efit

OutOutOutOut

InIn InIn

Books and papers Management and Organisational Behaviour 9th ed by Laurie J Mullins, 2010 FT Prentice

Hall Human Resource Management 7th ed by Derek Torrington, Laura Hall and Stephen

Taylor, 2008 FT Prentice Hall Accounting, An Introduction by Eddie McLaney and Peter Atrill, 2013 Pearson Accounting for Non-Accounting Students 7th ed by John R Dyson, 2007 FT Prentice Hall Information Management in Context by Matthew Hinton, 2009 The Open University Commercial Real Estate Investment: A Strategic Approach 2nd ed by A Baum 2008 EG

Books Corporate Real Estate Asset Management (Strategy and Implementation) by BP Haynes

and N Nunnington, 2010 EG Books Stapleton’s Real Estate Management Practice 4th ed by T Stapleton and edited by A

Banfield, 2005 EG Books What every leader should know about Real Estate by M Apgar, November 2009 Harvard

Business Review Facilities Management Handbook 4th ed by Frank Booty, 2009 Butterworth-Heinemann

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