Q&A: PRI's Jason Edwards On How Family Offices Are Improving Portfolio Performance With Asset Management
For high net worth individuals and family offices, understanding the value of real estate assets can be difficult. With a diversified, multi-asset portfolio, creating a strategy and navigating the ever-changing market takes time and focus.
Bisnow caught up with Jason Edwards, founder and principal at PRI Asset Management, to talk about the importance of asset management for high net worth individuals and family offices.
Bisnow: What is the story behind PRI asset management?
Edwards: I founded PRI in 2001, and the company has gone through several iterations since, including residential investing, brokerage and asset management. Over the last three years, we have been primarily focused on providing asset management services to high net worth individuals and family offices with a concentration on multifamily, retail and mixed-use asset classes. We found that institutional investors benefited from highly skilled asset managers, but there was not a similar type of solution for high net worth families and family offices. Not many real estate owners were aware of the existence of asset management, or its impact on enhancing and protecting portfolio value.
Bisnow: What is the institutional asset management process and how does PRI translate that to high net worth clients and family offices?
Edwards: Some say value is created when you buy an asset. At acquisition, you do increase the probability of a successful investment, but it’s the asset management process that executes the strategy that ultimately unlocks value during the hold period. At institutional investment firms, typically the acquisition team underwrites a deal, takes it through an investment committee, closes the transaction and then turns it over to the asset management division to execute the business plan with the support of property management, capital markets and construction management teams. Asset managers are responsible for the property during the hold period, whether that's 24 months or seven years. This ensures the value-enhancing business plan is executed and cash flow and asset value increase through the years leading up to disposition.
Oftentimes, asset managers are responsible for overseeing the renovation, repositioning and recapitalization of newly acquired assets. That being said, not all assets require significant physical, financial or operational change, and in those cases, asset managers are there to protect owner equity and incrementally improve annual cash flow. We found that many real estate owners wanted and needed institutional-caliber services scaled down to their portfolio.
Bisnow: What projects are you currently working on?
Edwards: Right now, one of our clients is a high net worth family, with $250M worth of assets under management and 55 assets. Our job is to oversee the asset-level strategy, and make sure daily and monthly operational activities are in line with the asset’s business plan. We advise on and manage the operational improvements that enhance cash flow and lower expenses. We also oversee disposition and redevelopment activities as well as de-risking the portfolio. Essentially, any activity that involves unlocking value and improving ROI for owners is our responsibility. It’s a methodical process, and it’s often a repetitive process. It requires an initial assessment, where we research individual and portfolio historical financials, operating data, lease agreements, loan and joint venture agreements.
Bisnow: What have you learned throughout the process of managing assets?
Edwards: Institutional firms benefit from asset managers that have a broad view of the portfolio and its strategy. They use that global viewpoint when making operational, financial and capital improvement decisions. What we find is depending on the makeup of the family office, asset level property managers may not all share that same viewpoint, and so many decisions that reduce owner distributions are made without a holistic view of the portfolio and the overall goals.
Bisnow: What are some myths or misconceptions about asset management?
Edwards: Many people think that asset management is for underperforming portfolios, but there are significant improvements that need to be made within healthy portfolios as well. Often, it’s healthy portfolios that are missing out on opportunities to increase revenue and value. Asset managers are dedicated to achieving the long-term goals of a portfolio and not focused on the day-to-day operations or acquisition efforts. This can help owners benefit from opportunities that are created by a changing market.
This feature was produced in collaboration between Bisnow Branded Content and PRI Asset Management. Bisnow news staff was not involved in the production of this content.