Capacity for Strategic Implementation of Responsible Property Investment

By M. Isi Eromosele

Due diligence in the acquisition and disposition of properties is at the core of real estate investment. Beliefs about the quality of a building and its location, consumer demand, regulatory and political environments in which the building operates, and its price relative to its long-term value all naturally underwrite investment decision-making.

Investors can adopt a variety of techniques to improve their RPI asset management and, thus, build the capacity for efficient implementation of RPI strategy.

One approach would be to create a catalogue of potential activities believed to further RPI strategies.  Such a catalogue offers a strategic approach to defining options for action. It may also help investors more rigorously track the success and/or failure of such activities across portfolios, which can then lead to more effective cost/benefit analysis over time.

Another approach is to separate a discreet number of properties from a larger portfolio for intensive analysis. The reduced number of properties will offer investors a clearer view of what information is currently available, how that information can be normalized across different types of properties and different geographies, and what gaps can be filled with new data gathering or information management systems.

The lessons learned in gathering data from this subset of properties can make full-scale information gathering across the portfolio more effective. This approach may be especially effective for large asset owners and managers, and for addressing key RPI issues in resource efficiency.

RPI As Standard Setting

Some investors may choose to use RPI criteria to set baseline standards for buildings they might develop or acquire. In the case of fund managers, setting clear standards can send a signal to asset owners about the nature of the portfolio in question. Clear standards may also help investors develop core in-house strengths in property management and development based on their familiarity with specific RPI issues.

Other investors may choose to use absolute performance standards for their portfolios - in other words, adopting screens that mandate a minimum level of performance, or set of characteristics, required of every building in a portfolio. These settings can be social as well as environmental. 

Practitioners often point to the difficulties in translating RPI measurement and management systems into terms and techniques that stakeholders less familiar with these issues will understand.  Implementing RPI strategies may require a relatively labor -intensive effort to set clear guidelines and build easy to manage tools for property managers and developers,

RPI is a relatively young and dynamic field. Industry standards and best practices are evolving, and many innovations in investment strategy and implementation are the result of formal and informal collaboration among key investors and other stakeholders.

For many investors in the field, RPI itself is a strategy to build corporate reputation, and enhance relations with investment partners, employees, community groups, government bodies, and others. As a result, the role of industry collaboration in RPI is particularly relevant.

M. Isi Eromosele is the President | Chief Executive Officer | Executive Creative Director of Oseme Group - Oseme Creative | Oseme Consulting | Oseme Finance

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