While real estate fund managers are feeling the stress of high-interest rates, declining valuations, empty office space, retail closings and a home buying slowdown, there is room for optimism—US funds account for nearly $1 trillion in AUM, and the number of active managers in the US has grown by 30% over the previous five years. Investors still view real estate as a hedge against inflation, and institutions increased their allocations to real estate in the first half of 2023. However, stressors are still creating anxiety and challenges for fund managers, and firms must adjust to the new environment.
Real estate funds have a lot of accounting and administrative complexities that can burden a firm’s resources. Simultaneously, regulations keep changing, becoming more demanding and stringent across jurisdictions. Institutional investors increasingly demand more transparency and detailed information about ESG commitments. These pressures necessitate better data management for more accurate and timely reporting. However, many firms continue to rely on legacy systems and paper-based processes. While advanced technologies are readily available to automate these processes, the cost, upkeep and pain of implementation can be unappealing.
Outsourcing can be an efficient way to address these operational challenges without burdening resources. Outsourcing allows firms to focus on the core business, satisfy investor scrutiny, reduce regulatory risks, leverage outside expertise, keep current with technology and focus on business expansion. Lift-outs are another good option for firms that want to reduce operational overhead and staffing costs.
SS&C is the world’s largest fund administrator and transfer agent. Our dedicated real estate fund services team has extensive experience in supporting organizations worldwide that invest in real estate portfolios. To learn more about how outsourcing and lift-outs can help you address the ongoing challenges and seize opportunities in the real estate landscape, download our "Rethinking Real Estate Fund Operations" whitepaper.
