Industries >Real Estate Investment Trust
Capacity Planning, Lease Analysis
IBM Cognos TM1, Revelwood Lightspeed for REITs, Revelwood Performance Toolkit
A large real estate investment trust (REIT) company with several billion dollars in assets and Class A office space in most major U.S. cities needed a sophisticated solution to model out leases for its buildings and space, and to plan for lease expirations and renewals. The solution would enable the REIT firm to perform complex capacity planning and revenue planning by identifying which regions and buildings are expected to gain capacity. This information would also allow the company to make strategic decisions about when and where to upgrade facilities, adjust rents and change terms of new leases. Lastly, REITs, which are modeled after mutual funds, typically pay out all of their taxable income as dividends to shareholders. As a result, REITs must adhere to a number of regulatory reporting requirements. This same solution needed to deliver robust and complex reporting functionality, not just for compliance issues, but also to create capacity reports and growth trends reports.
Based on decades of experience working with IBM Cognos TM1, Revelwood knew that TM1 could meet not just these needs, but also provide a foundation for future complex analytics and detailed reporting. The TM1-based capacity planning solution imports information on leases from an industry-standard lease management system. It then models lease and rental income information up to nine years out, by tenant, by lease, by building and by region.
This solution allows the REIT’s senior executives and operational management to ask detailed and strategic questions, such as:
- Which buildings have tenants with leases up for renewal?
- What is the current and anticipated capacity of each building?
- How much capacity do we have by city, by state, and by region?
- Which leases do we expect to renew and which do we think will end?
- What buildings should be renovated and how should the renovations impact current and future leases?
In total, the TM1-based capacity planning solution enables the organization to analyze information by tenant, by lease and by building. It can also perform analysis on expirations and renewals, in order to project current and future revenues based on both existing and anticipated conditions. These separate components all add up to a comprehensive solution that not only provides detailed capacity planning and revenue planning, but also facilitates more informed and strategic decision making around sales, expansion plans, and capital expenditures. Lastly, all of this information is easily compiled into real-time, accurate reports for regulators and investors.
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