The Forest & the Trees: The Forest & the Trees: Striking a - - PowerPoint PPT Presentation

The Forest & the Trees: The Forest & the Trees:

Striking a Balance Between Portfolios and Properties Striking a Balance Between Portfolios and Properties

Presenters

Todd Sears, Executive Vice President Brendt Rusten, Senior Vice President

Herman & Kittle Overview

• ~130+ ¡assets ¡in ¡portfolio

– ~15 ¡states – Midwest ¡through ¡South – Combination ¡of ¡9% ¡tax ¡credit, ¡tax-­‑exempt ¡bonds, ¡market ¡rate, ¡and ¡ self-­‑storage – Actively ¡growing ¡(3rd largest ¡affordable ¡housing ¡developer)

• Based ¡in ¡Indianapolis

– ~450 ¡employees

• ~325 ¡site ¡staff
• ~125 ¡home ¡office

– 5 ¡team ¡members ¡in ¡asset ¡management ¡function

• Revenue ¡Management
• Utility ¡Management
• Portfolio ¡Analyst
• Director ¡of ¡Portfolio ¡Management
• EVP/Portfolio ¡Management ¡& ¡Analysis

Dominium Overview

Portfolio Properties Units # of Properties Owned for

Owned 198 24,029 0-4 yrs: 5-9 yrs: 10-14 yrs: 15+ yrs Fee - Interim: 37 53 50 58 Fee - Permanent: 18 1,337 216 25,366

Employment Site:

713 Corporate: Property Management 50 Corporate Services 76 Development 39 Asset Mgmt 23 901

• Data last updated on 5/2016

Portfolio vs Property Perspective

• Our core philosophy:

Long–term ownership of real estate

• It starts at the property perspective and

moves to a portfolio perspective as soon as you have two assets

• We all combine both approaches as we run
• ur businesses

Portfolio vs Property Perspective

• Most developers build a portfolio one

asset at a time (i.e. think at the property level)

• Decision making often differs if viewed

from portfolio perspective versus property perspective

Examples

• Volume discounting
• Diversification

– Risk – Partners – Documents

• Resource allocation
• Market segmentation

Examples

• Portfolio examples

– Budgeting: Target numbers set for the portfolio regarding Income, Expenses and Capitals. – Corporate functions: Common portfolio services including HR, IT, Marketing, Asset Management, Compliance, etc.

Examples

• Property examples

– Eventually individual budgets – Individual contracts at the site level – Debt – Services at the property level

The need for property specific detail is driven because they are single asset entity's

Systems

• Workfront– A centralized database to track all active

development opportunities.

• Property Database – Dominium developed, easily

accessible system that includes vital information on every owned and managed property.

• Monthly Performance Reporting – A system to rank

Regional Managers on their portfolio performance and adherence to company policies and procedures.

• Stress Test the Portfolio – A test that allows us to

rank each property with a specific risk rating.

Workfront

Property Database

Monthly Performance Reporting

Stress Test the Portfolio

Discussion

• Other examples?
• Things to consider:

– Concentration risks that need to be diversified? – Economies of scale in the marketplace? – Market participants that differentiate by size, dollars, or geography? – More effective way to allocate resources than “per unit” or “per property”? – Issues are more complex than “the addition of the components”? Does your team need macro-level/comprehensive tools? – Benchmarks have shifted from “absolute” (i.e. a property in isolation) to “relative” (i.e. properties in comparison to one another)? – Portfolio is of size/scale where no one property will make/break the company by itself? – Has focus shifted from building “properties” to building a company

• r portfolio?

Wrap-up/Take Aways

Contact Information

Herman & Kittle Properties, Inc. 500 East 96th Street, Suite 300 Indianapolis, IN 46240 www.hermankittle.com Todd Sears, Executive Vice President W: (317) 663-6850 tsears@hermankittle.com Herman & Kittle Properties, Inc. 500 East 96th Street, Suite 300 Indianapolis, IN 46240 www.hermankittle.com Todd Sears, Executive Vice President W: (317) 663-6850 tsears@hermankittle.com Dominium 2905 Northwest Blvd. Ste 150 Plymouth, MN 55441 www.dominiumapartments.com Brendt Rusten, Senior Vice President W: (763) 354-5517 brusten@dominiuminc.com Dominium 2905 Northwest Blvd. Ste 150 Plymouth, MN 55441 www.dominiumapartments.com Brendt Rusten, Senior Vice President W: (763) 354-5517 brusten@dominiuminc.com