Real Estate Alert: Asset Managers Taking On Broader Duties

Real estate investment firms are increasingly looking to hire asset managers who can help implement property strategies from beginning to end.

The traditional role of an asset manager has been to oversee property managers and compile financial reports. But now, more firms are seeking candidates with the experience and skills to participate in acquiring, improving and disposing of properties.

“The companies we are working with are looking for asset managers that are much more strategic,” said Brandi Popovich, a managing director at RETS Associates, an executive search firm in Newport Beach, Calif. “It’s not just a number-cruncher anymore.”

For example, CenterSquare Investment recently added Rob Holuba as a vice president to work on both asset management and acquisitions at its Plymouth Meeting, Pa., headquarters. CenterSquare, formerly known as Urdang Capital, is looking to add a similar position in Newport Beach.

“Historically, asset management and acquisitions have been a bit more compartmentalized,” said P.J. Yeatman, who became head of private real estate at CenterSquare this year. “My view is you need to have better integration between the two disciplines.”

Having an asset manager on the front end of a purchase involves that pro in the business plan for a property — and makes for a seamless handoff when the acquisitions pro steps out of the picture. The asset manager is then well positioned to follow through on the strategy, whether requiring minor improvements or major repositioning. “This is an era of real estate execution,” Yeatman said. “The majority of the value creation today takes place through the physical enhancement of the asset post-acquisition.”

The upshot: More asset managers are coming to the job with experience in acquisitions rather than primarily an accounting background. “It’s a different skill set,” said Chris Papa, a managing director at executive search firm Bachrach Group of New York. “They are looking for all-stars — professionals who can take on multiple roles.”

The best places to find such candidates can be small private shops or regional firms, where asset managers tend to take on multiple functions. “They’ve had their hand in absolutely everything,” said Popovich of RETS.

To be sure, high-yield investors have always needed more-active managers. At the other end of the spectrum, core investment shops with long-term hold strategies are likely to stick with the traditional asset-manager profile. But in recent months recruiters have seen a variety of fund operators, REITs, family offices and other investment shops looking for managers with broad expertise.

In part, recruiters attribute the change to lessons learned from the downturn. Firms want to be more cautious and realistic in evaluating the potential of properties they purchase, and want asset managers who can assist in that process.

Some firms are seeking candidates with an “executive-level mindset,” who can oversee a portfolio of assets across a region, said Kent Elliott, co-founder and principal of RETS. His firm is leading the search for an asset manager on behalf of a national multi-family developer and operator. The company wants a candidate suited to eventually step into a larger role as a managing director of the division.

The expanded duties, in turn, narrow the pay gap between asset managers and acquisition professionals, who typically have made about 30% more, said Jane Lyons, a partner at New York executive search firm Rhodes Associates.  “Firms are increasingly rewarding the individuals that are creating the value in their investments,” Lyons said. 

Rhodes recently led the search for a head of asset management at Starwood Capital. The Greenwich, Conn., fund operator tapped Robert Scoville, formerly of Apollo Global Real Estate and Citi Property Investors, in part due to his previous involvement in all aspects of investment strategy and execution.

Rick Gillham, president of search firm Gillham, Golbeck & Associates of Dallas, has worked on several openings for asset managers recently that called for experience with various aspects of the business, including construction. “It has become a more soup-to-nuts job than it used to be,” he said.