MSc Real Estate

Management REM 05 (am)

Introduction and some basic
definitions

Dr. Ashley J Dabson

04/08/15
Wednesday,
April 8, 2015

www.henley.reading.ac.uk

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 70s. 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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04/08/15

The structure of the module

AM sessions
PM sessions
11:00am to 13:00pm
14:00pm to 16:00pm
MSc only
MSc & Year 3 BSc
Landlord view point
Tenant view point
Investment 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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04/08/15

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

Page No 8
8 April 2015

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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8 April 2015

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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8 April 2015

In the RE sector nothing is clear!

Investment
Strategic

Corporate
REIM

Asset management (AM) is a

term often used to mean
investment management (IM)

IM

IPM
AM

Asset management (AM) is

a term often used to mean
Property management (PM)

Operational
Page No 11
8 April 2015

PM

IM
Investment management
REIM Real estate investment management
IPM Investment portfolio management
AM Asset management
PM Property management
FM Facilities management

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

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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8 April 2015

Asset management (definition 1)

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

portfolio
portfolio
management
management

Establish
Establish
portfolio
portfolio
goals
goals
Property
portfolio
investment

Managing property
as part of an investment
portfolio means that it
Construct
Construct
may be considered as
Portfolio
Portfolio
an aspect of investment
portfolio management
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8 April 2015

Determine
Determine
risk
risk

Set
Set asset
asset
allocation
allocation
policies
policies

Asset management (definition 2)

Managing the property
as an investment
for operational
Corporate
management
advantage

Typical priorities & concerns

Organisational strategic goals

Capital investment optimisation

and sustainability planning

Sustained performance
cost & risk optimisation
Optimise life
cycle activities

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8 April 2015

Create/acquire

Manage asset portfolio

BS PAS 55 (2008) Asset

management system

Manage asset systems

Utilise

Manage
assets

Maintain

Renew/dispose

BSI & Institute of Asset Management

Asset management in the hierarchy

Investment market
Investment Portfolio Management Operational Portfolio Management
Investment Portfolio

(1)

Operational Portfolio
Asset
Management
(2)

Property Management
Facilities Management
Customer (Tenant and/or Occupier)

Slide Number 15
8 April 2015

---- and the investment income security!

A move away from the traditional
offices and retail?
I n c o m e s e c u r it y a n d g r o w t h p o t e n t ia l - a ll p r o p e r t y
What
about the management?

All Property and Sectors

a n d r e ta il
R e ta il P r o p e r ty

A ll P r o p e r ty a n d S e c to r s
In c o m e s e c u r ity a n d g r o w t h p o te n t ia l

I n c o m e s e c u r ity a n d g r o w t h p o t e n tia l

A ll P r o p e r t y

R e ta il W a r e h o u s e s

In d u s tr ia l

S h o p p in g C e n tr e s

O ffic e

S ta n d a r d U n its
R e t a il

-2 0
-2 0
D e v e lo p m e n t

-1 0

10

20

30

-1 0

40

R e ta il

O ffic e

In d u s tr ia l

A ll P r o p e r ty

0 .4

6 .3

0 .9

2 .1

V o id s / v a c a n t

3 .8

1 5 .0

1 1 .7

8 .0

R e v e r s io n a r y

6 .1

8 .0

5 .2

6 .5

R e n t fre e

2 .5

7 .0

2 .8

3 .7

T o p s lic e

-7 .3

-1 0 .7

- 7 .4

-8 .2

S t a n d a r d U n it s

S h o p p in g C e n tr e s

D e v e lo p m e n t

0 .7

0 .2

V o id s / v a c a n t

4 .5

4 .5

R e v e r s io n a r y

7 .7

9 .3

Is the growth in management

a problem or an opportunity?
R e n t fre e

4 .5

4 .5

T o p s lic e

-9 .2

-8 .0

P e r c e n t o f t o t a l r e n t p a s s in g

I n c o m e s e c u r it y a n d g r o w th p o t e n tia l
A ll P r o p e r ty d e v e lo p m e n t p e r c e n ta g e o f to ta l r e n t p a s s in g in c r e a s e d in 2 0 1 1 to 2 .1 % fr o m 1 .4 % in
2 0 1 0 . W h ile t h e v o id s /v a c a n t p e r c e n ta g e r e m a in e d t h e s a m e a t 8 % , r e n t fr e e p e r io d s r o s e fr o m
Page
3 . 5 % No
i n 16
2 0 1 0 to 3 .7 % in 2 0 1 1 .
8 April 2015

A t s e c t o r le v e l, o f f ic e s w e r e a g a in t h e m a in c o n t r ib u t o r w it h 1 5 % o f it 's t o t a l r e n t p a s s in g e it h e r
v a c a n t o r v o id in 2 0 1 1 , a n d in c r e a s e fo r m 1 3 . 1 % in 2 0 1 0 . In d u s t r ia l a s s e ts h o ld s lig h tly le s s w it h

R est of U K
R e s t o f S o u th E a s t
C e n tra l L o n d o n

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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8 April 2015

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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8 April 2015

Property management objectives

Rent profile with property management
Rent profile with limited intervention
Rent profile without intervention

Depreciation

1. Maintain operational value

2. Retain property value

Obsolescence

Value

3. Extend operational life

Economic life of the building

Years
Page No 19
8 April 2015

Extended
economic
life of the
building

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.

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8 April 2015

Facilities management activities

Property portfolio & facilities planning

Managerial
(white collar)
Service desk
Operational
management

Property & other asset life cycle management

Environmental management
Integrated services

Value added services &

technologies

Service management

Multi-site integrated management & reporting

Relocation & programme management

Facilities/equipment monitoring & reporting
Service desk management
Staff/contractor management & budgetary control

Operational
(blue collar)

Service Delivery

Vertically bundled
services

Soft FM
Cleaning
Laundry
Catering
Security
Transport
Courier
Reprographic
Pest control
Grounds

Hard FM
M&E maintenance
UPS & generators
HVAC
Gas services
Fire & security
Building fabric
maintenance
Plumbing

Environmental
Services
Water
Waste
Power
Health & safety
Commuting

Horizontally bundled services

Page No 21
8 April 2015

Source: Based on FM Index FM World Feb 2009

The traditional RE management hierarchy

Investment market
Market
Compressed
Yields

Asset
Management

Focus
Investment
Value

Property Management
Facilities Management
Confrontational

Slide Number 22
8 April 2015

Collaborative
Customer (Tenant and/or Occupier)

Confrontational

Are we at this point yet or

are we back to the traditional?
Investment market
Market
Softening
Yields

Asset
Management

Focus
Investment
Income

Collaborative
Facilities & Property Management
Collaborative
Customer (Tenant and/or Occupier)

Slide Number 23
8 April 2015

The management scope issue

The total portfolio needs

Operational
Portfolio (i

management

Asset management

Property management

Page No 24
8 April 2015

Investment
Operational
Owner
Occupier

Facilities management

Core Portfolio
(functional obsolescence risks)

io
ol
rtf )
Po ks
d is
te lt r
na au
i e ef
Al (d

approach will no
longer be sufficient!
This applies to:

Corporate
Real Estate
Costs Low

(v t
oi P
d or
ris tf
k s ol i
) o

The traditional RE

le er
xib ip
ilit he
y/ ra
lo
w lP
ut o
iliz rt
at f o
io lio
n
ris
ks
)

Va
ca
n

Core
Peripheral
Convenience
Vacant
Alienated

(n Th
o n ir
-c d P
oh o
es rt
io f o
n lio
ris
ks
)

nf

Nonoperational
Portfolio

Corporate
Real Estate
Costs High

Know Your Portfolio Costs and Benefits

In

In

Third Portfolio

Operational portfolio

Alienated Portfolio

Vacant Portfolio

Benefit

High

Low
Out

Low

Page No 25
8 April 2015

Out

Cost

High

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
Stapletons 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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8 April 2015