Basic Responsibilities of the Real Estate Asset Manager

The asset manager fills a seminal role in the profitable management and performance of a real estate asset.  Within this role, the asset manager serves as a “fiduciary adviser” to the owner, with the responsibility to manage the business affairs of the asset.  The word “trust” is the key word when defining the role an individual plays as an asset manager.  The underlying magnitude of the economic and liability risk associated with owning commercial real estate is material, and the owner is “trusting” the asset manager to perform their responsibilities in a professional manner. 

Ownership of commercial real estate assets comes in many forms.  The ownership can be in the form of an individual, pension fund, lender (as a mortgagee or owner through foreclosure), corporation or business, government, or non-for-profit,  just to name a few forms.  However, no matter it’s form, the Ownership is usually interested in deriving benefits from owning the asset.  The corporation would derive benefit from utilizing the asset to facilitate it’s business mission, while the non-for-profit would derive benefits from pursuing it’s non-for-profit goals.  An experienced asset manager can maximize the benefit of ownership of their asset regardless of the ownership structure. 

An effective asset manager aligns their objectives with the owner’s objectives.   Thus the first order of business of an asset manager when assuming asset management responsibilities, is to clearly define the objectives of the owner.  Once the owner’s objectives are clearly defined, the asset manager will then build the asset management business model around these objectives.  For example, if the owner’s objectives are to hold an asset for profit for (say) ten years, then the asset manager will structure the business model to generate long-term profits within the expectations of the owner. If the owner is a lender who obtained the property from foreclosure and has the objective is to maximize the value of the property in a short timeframe and liquidate to cover it’s loan balance, then the asset manager will organize a business model targeted to achieve this objective

Although the role of the asset manager can vary depending on the owner’s objectives and unique characteristics of the asset, there are several basic mnanagement components that are universal in the administration of a real estate asset that constitute the fundamental role and responsibilities of the asset manager.  These  nine responsibilities are as follows:

1.  Supervision of the property management company;

2.  Supervision of the leasing/marketing company;

3.  Cash flow and bank account management;

4.  Reporting requirement and timing;

5.  Liason with tax advisors for appropriate taxation program;

6.  Physical condition/capital improvements;

7.  Hiring and supervision of  third-party professionals (attorneys, appraisers, engineers, etc.)

8.  Supervision of refinancing, sales and purchase activity;

9.  Contract compliance (leases, loan agreements, service contracts)

The asset manager serves a distinguished and critical role as a fiduciary for owner in professionally managing real estate assets.  Although each real estate asset is unique in terms of location, physical characteristics and ownership agenda, there is an overlying operations structure common to all real estate assets.  This operational structure can be separated into nine distinctive responsibilities.   Additional information for each of these nine responsibilities will be forthcoming.  I would appreciate any comments.

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