PPR has long been recognized for our application of research to clients’ specific needs and issues. Over the years we have developed expertise and many tools and applications to assist clients with analytic needs. We provide both tools that are used directly by clients and the assistance to apply advanced analytics to their research needs.
Understanding the local commercial real estate market surrounding a property is vital for due diligence and asset management. PPR provides a delivery platform to aggregate all market, submarket, and property data surrounding a specific address. It includes integration with mapping software to display point data in proximity to your property address. Users can choose specific sales and rent comparables based on class and proximity, and evaluate planned new supply that may affect the performance of an asset.
How a particular asset performs in the context of a portfolio helps clients make better decisions on acquisitions and dispositions. PPR’s asset analysis application quantifies and illustrates risk and return for each asset in a client’s portfolio as well as for the overall portfolio.
PPR can use a firm’s Argus models to determine each asset’s rent and occupancy relative to the local submarket and cap rate differential relative to the overall market by taking the weighted average rent, occupancy rate, and cap rate of the asset in the starting year and comparing it to the submarket average rent, submarket occupancy rate, and market cap rate. This will capture the competitive advantage or disadvantage of each asset relative to the submarket, and these premiums and discounts will then be used to adjust lease-up rents and occupancies and valuation cap rates.
Once we have income streams and valuations for three different scenarios, we can calculate total returns for each year in the forecast using the income return for the year and the change in valuation. We will then end up with three different average annual return forecasts (base case, worst case, and best case). By taking the standard deviation of those three average annual returns, we can attribute risk, and therefore calculate risk-adjusted returns.
PPR’s proprietary screening tool can be used to uncover additional markets for consideration in response to investment objectives. Factors to be considered may include economic conditions, demographics, barriers to new supply, market fundamentals (supply, demand, vacancy), and expected investment performance, including current and forecast yields, value growth, and availability of product.
PPR produces Strategy Screens for each of the major property types which includes market rankings based on the following strategies: Core, Value-Add, and Opportunistic. These Strategy Screens highlight not only which markets to target, but also which ones to avoid. Communicated by detailed charts and brief commentary, the reports display the strengths and weaknesses of each market
Clients have a need to understand how their portfolio is performing relative to an objective benchmark and to identify potential problem assets so they don’t get surprised. PPR has developed tools and applications to help construct portfolios that meet a client’s risk/return profile and can be measured against industry benchmarks.
Custom tools allow clients to calculate the efficient frontier and then locate their current portfolio in risk and return space. We then execute a set of diagnostic exercises to help clients see which assets and markets are most and least helpful in achieving their portfolio goals.
Additionally, we compare the client’s portfolio to one of several industry benchmarks to help understand how it is performing relative to the broader market. This exercise helps to both minimize unexpected problems and communicate investment performance.
Market volatility, coupled with growing regulatory demands, has reinforced the need for an empirically validated model to quantify and effectively manage commercial mortgage risk. COMPASSCRE combines PPR’s industry-leading commercial real estate data and analytics with its quantitative credit modeling expertise to produce the premier commercial real estate risk management solution available to the market today. COMPASSCRE is calibrated and back-tested over 25 years of real estate cycles. By applying the same type of robust, statistically driven analytics employed successfully in the corporate debt markets for years, lenders and investors can set reasonable reserves by estimating expected and unexpected loss for a loan, portfolio, or securitized pool.
The same market volatility and regulatory demands in commercial mortgages apply to commercial mortgage-backed securities. COMPASSCMBS combines PPR’s industry-leading commercial real estate data and analytics with its quantitative credit modeling expertise to produce the premier commercial real estate risk management solution available to the market today.
COMPASSCMBS is fully integrated with Trepp.