Questions and Answers of Real Estate Finance and Investment

Is there sufficient flexibility within your portfolio? Would a more contemporary approach be beneficial? LO.1
Are the lengths of the leases of your operational real estate consistent with your business plans? Do you have sufficient flexibility and have you considered the real risks of long leases compared to
Undertake utilisation studies of your meeting and boardrooms. Are they being underutilised? If so you should consider moving to premises, at the next opportunity at which you can procure these and
Where leasing, examine the landlord carefully and look to metrics on their performance with the likes of the RICS codes on leasing and service charges, the occupier satisfaction indices, etc.
If you are considering a new building, examine the cash flows of both freehold and leasehold opportunities in addition to the strategic and operational needs. With freehold, take advantage of the
and 8. At the same time, remember that leasing a pre-let development might provide some of the same opportunities to design-in your preferences. LO.1
If you consider that capital tied up in your portfolio is not working as hard as capital in the business, it may be worthwhile to examine a sale-and-leaseback transaction. LO.1
If you do consider sale-and-leaseback, think about the financial reporting implications of the accounting for leases rules and consider how this may affect the attractiveness of a sale-and-leaseback.
Large organisations may wish to consider total property outsourcing and focus on their core business. However, you should be aware of both the advantages and disadvantages to such transactions. LO.1
A way of establishing the organisational demand for space is through the use of a strategic brief. During the preparation of the brief, consideration should be given to:a evaluation of the
Once the organisational demand has been established, possible locations and buildings can be evaluated. The building and workplace appraisal should include an evaluation of:a the macro location
Consider how to integrate the CREAM strategic alignment model proposed in Chapter 3, ‘Purpose’, with what you have read in this chapter to ensure that the building and workplace supply match the
Identify what communication strategies and change management programme requirements are necessary to run in conjunction with a successful relocation project. LO.1
Consider how a detailed analysis of work styles could inform the space planning process.How would you ensure that the analysis is translated into an effective design? LO.1
How would you ensure a representative dataset from any observations or survey of what tasks people perform in their current office environment to support your space planning process? LO.1
How would you measure the need for meeting rooms/spaces in a relocation process? LO.1
Draft a post-occupancy survey instrument to examine the effectiveness of a relocation/reconfiguration process. LO.1
Critically evaluate the relocation-based case studies (Case Studies 3, LO.1
and 9). What are the main differences between them? How has the relocation process evolved over the period of time from the first case study (2008) to the last (2016)? LO.1
What arguments could you use to persuade an organisation to shift its focus from the supply of real estate and the ‘property deal’ to a demand-driven analysis approach based upon the needs of the
Generation Y workers have clear expectations of the workplace that include a number of different spaces to allow for work, play and rest. They also expect the workplace to be highly connected so that
Older office workers have their own expectation of workplace provision, which is largely determined by their preferred work style. However, they also have some unique expectations that are related to
Ensure a balance of workspace provision is provided to meet the diversity of expectations and facilitate multigenerational working. Also give special consideration to team-based workspaces, informal
Consideration needs to be given to both calm, reflective environments and stimulating interactive environments to ensure the right balance is achieved to support the different tasks undertaken and
Identify the gender profile of the workforce and be aware of potential difference in requirements based on gender, specifically relating to individual control of thermal comfort. LO.1
When considering multinational office environments, consider the potential differences in national culture and integrate local cultural differences into global workplace strategies. LO.1
Look around where you work. How many distinct profiles can you identify in your office? Do you think your workplace supports the differences between the profiles you have identified? LO.1
What strategies can you suggest to improve the fit between the profiles of the people you have identified and the configuration of the workplace to improve satisfaction and potentially
The very first question, as always, is why are we even discussing this? Do you really need this space? Always double check the case for space. The cheapest, most sustainable and only carbon-neutral
Do not be afraid to purchase expert advice. Consultants’ fees might be the easiest way to bankruptcy, but space is a long-term commitment so making sure everything is correct and what you sign is
Occupy a certified building such as BREEAM Excellent or Very Good or LEED Platinum or Gold. Probably. Evidence suggests that developers and landlords obtain higher rents and capital valuations, so
Occupy a building with a good EPC rating – A or B. The same caveats may apply as above. Better energy efficiency will save costs and benefit the environment. However, remember that social factors
Create an occupation plan, ensure that fit-out takes into account the realities of how people use buildings. Energy-saving devices should be fitted to manage the resources more effectively. A decade
Introduce or retrofit sustainable measures. These can be social or technical, concerning reorganising how the building works or adding extra features. Examples include solar shielding in hot
Consider your own CSR policies with the way that the space is being run. Practice what you preach or be clever in hiding this. Good CSR practices can be utilised in branding.Jarring inconsistencies
Do you need the space you occupy? We raised this as the very first question, but it should be constantly revisited. The needs of the business change, so check and recheck.Undertake space and
You need hard data to manage your assets. Utilise the likes of the RICS SKA system.Building information modelling needs to be constantly kept up-to-date and used. Use ISO 14001 to review compliance
In fact, in the long term, we need to be far more ‘scientific’ as a profession. Occupancy surveys need to be a more integrated part of what we do, and we need to build evidence to make the case
Be transparent. Continue to be socially responsible and keep au fait with cultural and business norms within your sector and locations. Ensure that best practice is communicated throughout the
Do not simply accept regulation, but ensure that your organisation involves itself in consultations and represents its viewpoint. Involve trade and professional bodies with this, too. Disseminate
Embrace technology. As a profession, we must learn about the digital tools available and use them. The business needs to recognise that the non-core ‘IT department’ is now a hub of the business.
Finally, keep an open mind. Our daily tasks might keep us fully occupied, but we need to continually measure and monitor. Current buzz concepts (as of 2016) such as ‘quality of life’ might prove
Does your organisation undertake systematic performance measurement and/or benchmarking? If not, why not? LO.1
Does your organisation examine year-on-year performance and compare facilities internally? For example, total occupancy costs or space per person at each location. If not, consider starting a
Do you have an ‘apples and pears’ problem? Have you fully considered issues of compatibility, including:• measurement;• type of occupation; and• periods of depreciation. LO.1
Are you aware of the variety of benchmark clubs or publications available to externally validate your internal analysis? Consider which are the most suitable for your organisation, in terms of cost,
Consider linking your company strategy and real estate strategy by using appropriate‘hybrid’ indicators, such as real estate costs as a percentage of production costs per business unit. LO.1
Consider a strategic approach as advocated by Osgood, rather than simplistic measurement of space. Are there strategic opportunities to align business goals, culture and human resource issues with
Are your service charge payments too expensive ? Use the freely available OSCAR service to benchmark your costs against the average in the UK and Frankfurt (for offices). LO.1
Analyse your occupancy costs and, using either MSCI/OPD, DTZ/Cushman &Wakefield online occupancy metrics or Actium Consult benchmarks, determine whether your occupancy costs are out of line with
Consider a strategic approach to space usage and measurement as advocated by Osgood and consider the types of workflow and use of the space before applying an analysis of space per person. LO.1
Examine the Balanced Scorecard approach and consider the real estate metrics that should be included to support the business strategy of your organisation. LO.1
Explore the PLANON website and consider how a system such as this could enhance your understanding and measurement of performance. LO.1
How could the reporting of performance measurement and benchmarking as facilitated by integrative systems such as Planon impact upon an organisation’s productivity? LO.1
Ensure that detailed attention is given to lighting, temperature and ventilation at the design and procurement stages if the impacts of the physical attributes of the office environment are to have a
It is important that the CREAM professional plays specific attention to the behavioural office environment. The office spaces created should be managed to optimise the balance between interaction and
The CREAM professional should ensure that any workplace solution enhances the three levels of connectivity. The levels are:a Workplace connectivity: the connection between the office occupier and
Consideration should be given to the potential impact on occupier productivity of the different office layouts such as individual, shared, combi and flexi offices. LO.1
Develop a detailed understanding of the linkages between health, wellbeing and productivity in the workplace. Also give special consideration to office plants and biophilia. See Chapter 9,
When evaluating productivity improvements, consider undertaking a longitudinal study that includes a pre-evaluation, intervention and post-evaluation so that relative measures of productivity can be
Research into workplace productivity is constantly evolving and is moving from purely academic research to a more action research approach with unique solutions being developed. Therefore, the
Functional: a traditional CRE model that promotes autonomy based on real estate function, with each function or ‘silo’ reporting to the global lead. LO.1
Geographic: allows the global lead to have overall control of the real estate functions, with regional executives liaising with local business units and service provider representatives on the
Process: involves structuring the real estate team and functions around delivery and transformation processes, matching each activity to the lifecycle of real estate.Executives accountable for each
Market/customer: assigns relationship managers to key business units who then report back to the CRE lead. Each business unit manages a range of strategic and tactical services on behalf of the
Expectations and pressures build, heightening the risk of underperformance.Leadership pressure demands action at both tactical and strategic levels. CRE teams are being challenged to impact and add
Increased demand is leading to faster-paced evolution of CRE outsourcing.Extended and complex demands on in-house CRE teams are driving rapid growth in CRE outsourcing across more geographies,
Workplace transformation is the key to unlocking worker productivity and optimising portfolios. Embracing new work styles and implementing supportive new workplaces has been a strategic vision, if
CRE must become a collaborative change agent. A greater focus on workplace transformation calls for a cultural shift within the CRE team. CRE teams need to become adept at working across the
Failure to deliver in emerging markets will become one of CRE’s greatest reputational risks. The CRE function remains tasked to deliver operational platforms in select growth markets. These markets
Linking facility management to strategy. This trend establishes an ever clearer linkage between the FM provision and the organisation’s core business strategy. It includes the relationship between
Emergency preparedness. This trend is all-encompassing and could be labelled as risk assessment. At one end of the scale are issues such as basic safety and security; at the other end of the scale
Change management. This trend relates to not only the changes that occur within the FM department, but also the changes that occur to the organisation’s core business. In response to changes in the
Sustainability. This trend is demonstrating a significant growth in importance. On a technical level it includes energy management and evaluation of building performance.On a managerial level it
Emerging technology. Technology is having an impact on the way buildings are monitored and used. This includes complex building systems that can measure and monitor the performance of the building.
Globalisation. The world has increasingly become a smaller place, with large organisations having a global presence. The geographical diversity of an organisation requires the FM department to
Broadening diversity in the workforce. This trend captures changing workplace demographics. It identifies that the workplace has a multigenerational workforce, which includes an ageing component. The
Ageing buildings. This trend captures the need for maintenance of buildings and issues relating to the replacement of the building. As a building reaches the end of its planned working life,
CRE teams are becoming increasingly centralised and global, being more formally connected to the C-suite and better empowered to drive change. LO.1
Interaction and integration with other business functions and stakeholders is a growing need, but is a feature of only a few CRE teams. LO.1
Demand to deliver across a range of tactical and strategic activity continues to intensify, challenging the composition and skills of CRE teams and creating a ‘pressure cooker’ of expectations.
As pressure grows, CRE teams are using outsourced service providers across more geographies and industry sectors; but many are still missing the opportunity to drive strategic, long-term value
Undertake a PESTEL analysis for your organisation to establish key drivers affecting your business. Ensure that representatives from the strategic management team and the real estate team are
Convert the drivers into the ten most significant key issues in the environment for your business. LO.1
Undertake a SWOT analysis for all your real estate assets. LO.1
Load the strengths and weaknesses onto a grid and compare them to the issues in the environment. This should reveal the most significant opportunities and threats and inform the CREAM strategy. LO.1
Consider scenario-planning techniques where your business environment is especially volatile. LO.1
In your scenarios, encourage the participants to think the unthinkable to avoid the myopia suggested by Bill Gates. LO.1
Consider how disruptive technologies might:• impact upon the type of premises and virtual working solutions that your organisation may be able to utilise in the future;• liberate an organisation
Prepare an action plan for how co-working spaces may:• impact upon your portfolio if you are a property owner; and• be an opportunity for flexibility and managing innovation if you are an
Review your organisation’s workplace from the perspective of:• its ability to adapt to the trends identified in this section in terms of the scenarios that have been summarised. What are the
1. The place where a real estate borrower makes a loan application, receives a loan, and makes loan payments describes the A. primary mortgage market.B. secondary mortgage market.C. first loan
2. Historically, the foremost single source of funds for residential mortgage loans in this country has been A. commercial banks.B. insurance companies.C. mortgage companies.D. savings and loan
4. Reasons for the decline in residential loans made by the S&Ls include all EXCEPT:A. deregulation of the lending industry.B. proliferation of savings and loan organizations.C. new laws that allowed
5. A real estate loan that calls for the lender to receive interest plus a percentage of the rental income from a property is A. designed to protect the lender from inflation.B. known as a
6. Mortgage companies A. originate loans.B. service loans that they have sold on the secondary mortgage market.C. Both A and B.D. Neither A nor B.
7. The secondary mortgage market provides A. a means for investors to acquire real estate loans with origination and servicing facilities.B. a way for a lender to sell real estate loans.C. Both A and
8. All of the following are true of the Federal National Mortgage Association EXCEPT that it is A. a privately owned corporation.B. managed by the federal government.C. active in buying FHA and VA
9. Participation certificates issued by Freddie Mac can be A. sold for cash.B. used as collateral for loans.C. Both A and B.D. Neither A nor B.
10. Collateralized mortgage obligations issued by the FHLMC provide an investor with investments of A. predictable maturity.B. guaranteed yields.C. Both A and B.D. Neither A nor B.

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