September 26, 2023
The CRE industry is adapting to capital flow challenges by increasing technology investments to improve ROI and investor relationships. Explore the full article and discover how these innovative solutions, like Prophia, streamline data management and reporting for better business intelligence.
When an industry is faced with widespread capital flow challenges, it becomes imperative for leaders to get creative with their team’s investor strategy. In CRE, this has caused many decision-makers to pivot significantly, all but leaving behind the solutions that reliably worked for securing investor interest in a pre-COVID market.
One such pivot involves a greater investment in technology—or at least, a recalibration on that front. According to Eugene Tetlow, Head of Strategy for Private Equity and Venture Capital at Juniper Square, when VC streams were healthier, decision-makers would simply add a new bit of software to their tech stacks and call it a day.
Today, there is much more a need to discern and discover those advanced technology tools that really move the needle when it comes to ROI. Tools that will make the cut in these budgeting conversations must be able to offer practitioners a competitive advantage as well as the ability to strengthen relationships with investors—starting with the ability to meet their reporting requirements.
Jump To A Section in This Article
A Pre-COVID Attitude to Tech Adoption
The Importance of Tech Orientation
The Growing Need for Advanced CRE Reporting
A Single Solution for Numerable Reporting Requirements
A Pre-COVID Attitude to Tech Adoption
When the investor capital stream was much healthier and fledgling companies were jumping on the tech bandwagon, there was no shortage of software options, and many decision-makers regularly adopted tech tools quickly and with carefree abandon.
Today, this has led to many teams working with systems of technology that just aren’t capable of speaking with one another, creating disparate channels of business intelligence. As a result many CRE teams may have put themselves in a vulnerable position in the spirit of being cutting edge.
Tech adoption is and will continue to be incredibly important for attracting investors, but the way forward will certainly look different, starting with the type of technology firms choose.
The Importance of Vertical Vs. Horizontal Tech Applications
Horizontal and vertical AI are distinct AI applications, similar to horizontal and vertical SaaS. The key difference is their scope and specialization. Horizontal AI, like Docugami, offers general-purpose intelligence applicable across multiple domains, while vertical AI, like Prophia's CRE-focused AI, specializes on one specific industry.
One of the standout benefits of vertical AI is its unparalleled data accuracy and specificity. Unlike its horizontal counterpart, vertical AI is precise due to its focused training data. This precision is vital in an industry like CRE, where accurate portfolio data is instrumental in securing capital, tenant satisfaction, and contract improvements. Imagine vertical AI as a lighthouse, emitting a concentrated beam of light, while horizontal AI resembles stadium lights, illuminating broader themes but lacking the nuance required for precise CRE reporting.
Moreover, Prophia’s specialized, vertical design around the needs of decision-drivers in CRE means our AI is uniquely qualified to support report customization. This tailored approach makes Prophia portfolio reports capable of reflecting CRE-specific goals and constraints and a valuable asset for strategists and investors alike.
The Growing Need for Advanced CRE Intelligence & Reporting
Your portfolio intelligence is an incredibly important tool for tracking the performance of certain properties or an entire asset class, but it can also build investor confidence when interest (and funds) cool. Thus, CRE teams who invest in their intelligence capabilities are also investing in a relationship with their investors.
Immediacy.
AI can help improve the immediacy factor when it comes to CRE intelligence. Prophia eliminates the need to use a gauntlet of spreadsheets to manually aggregate leasing insights used to build portfolio intelligence. This greatly helps improve the turnaround time of report generation and provides investors with immediate answers to requests that come up in meetings or ad hoc over the phone.
What’s more, being able to aggregate and share this data immediately with Prophia’s portfolio intelligence eliminates any issues with latency impacting accuracy. With Prophia, your data is never outdated which means you are always working from accessible, real-time reports.
Shareability.
With AI tools, like Prophia, CRE professionals can share reports with everyone on their team as well as external investor groups. Better shareability brings investors and JV partners into the fold, ensuring interests of all stakeholder groups are fairly represented, risks are adequately assessed, and leadership teams are empowered to make the most informed decisions.
Risk mitigation.
Learning to identify risks upstream is an incredibly important skill for teams navigating a capital-suppressed market. One of the benefits of using advanced AI to manage important investor and client-facing data is the ability to foresee leasing opportunities and risks long before they occur. With this level of transparency, teams have an ample amount of time to get out in front of these risks by prioritizing and delegating tasks to the appropriate teams.
Data accuracy.
In addition to greater report accessibility, data accuracy will go farther than ever before, ensuring every stakeholder is up-to-speed throughout the decision-making process. Prophia makes data due diligence incredibly simple, directly linking every critical datapoint in a lease summary or portfolio report back to the original lease agreement. It’s just one additional level of coverage Prophia offers CRE professionals to foster relationships with investor groups and move the ROI needle.
Communication & engagement.
Regular reporting fosters ongoing communication and engagement with JV partners and investors. And when critical lease data is synthesized with advanced AI, the resulting data accuracy and CRE intelligence yields better discussions, questions, and feedback. This communication can lead to collaborative problem-solving and the sharing of ideas to enhance the portfolio's performance.
Accountability.
Just as specialized AI tools enable better data governance, sharing these performance reports also holds the investment manager or sponsor accountable for the results. It allows partners and investors to assess whether the investment is meeting its goals and objectives. If performance falls short, it can prompt discussions about necessary adjustments or strategies to improve results.
Reputation management.
In addition to accountability, portfolio reports built around structured lease data can also enable teams to convey performance wins. With access to archived reports and quantifiable data from on-going leases, Prophia makes it possible for teams to tell the data-driven story of their successes, effectively manage their reputation, and inspire prospective investors to engage with their business.
Informed decision-making.
Regular performance reports provide valuable data and insights that can inform decision-making. JV partners and investors can use this information to evaluate the performance of their investments and make informed decisions about whether to continue, adjust, or exit their involvement in the venture.
Prophia: The Single Solution for Your Many Reporting Requirements
Reporting governance, data accuracy, accountability, and risk mitigation are hard enough to achieve with multiple people on a single team working towards the same goal. What's even more amazing is that all of these capabilities are now achievable within one AI-powered CRE tool. This is where Prophia shines as the CRE tech of the future. It enables CRE teams to own their data and use real-time reports, detailed lease abstracts, and operations functions to make business decisions and nurture relationships with key investors.
With Prophia, CRE practitioners can effectively automate many of the items on their to-do lists and devote serious time to the strategy exercises that make a difference. Whether that’s seamlessly running a rent roll report, working off of Prophia’s stacking plan, or supporting the growing reporting requirements from investors, this single AI solution has the power to do it all–and with accuracy.
As the market continues to throw CRE professionals curve balls, it’s time, more than ever, for those teams to control what is controllable. If you’re curious to get started abstracting your first asset, or perhaps one of the most complex leases in your team's portfolio, a member of our team would be happy to walk you through a product demo.
Is your team ready to successfully facilitate deals or pivot strategies to attract the next generation of investors? Prophia can help you take your first steps toward digitization and support your team’s future endeavors as the CRE landscape changes.