Model Build

Schroders

Numeritas was engaged by Schroders Capital to develop a real estate fund forecasting model which would allow fund managers to make more informed investment decisions

Tenancy Level Forecasting

Calculations were performed at tenancy level across a portfolio of >65 assets with multiple tenancies. This resulted in granular and accurate reporting of rental income, returns, yields, void rates, and portfolio KPIs.

Detailed Reports & Scenario Analysis

As well as integrating the fund financials, we developed several dashboards at a fund, sector and property level, with the ability to run variance analysis across two scenarios at a time. The impact of assumption changes on the fund’s risk reporting could also be tracked in one place.

Flexible and Future-Proof

With a 10-year forward looking timeline, the fund managers can now add and remove assets from the model as required and manage the tenancy schedule (>1200 leases) within the model. The timeline can be rebased with relative ease once the model requires rolling forward.

Challenge

Schroders Capital had identified several limitations in their existing fund model. There was room for improvement to allow for more detailed reporting, and to enable more timely analysis of how investment decisions impacted on performance and risk metrics. 

Recognising the need for a more efficient solution, they tasked Numeritas with developing a new tool to enhance their investment analysis capabilities.

Solution

Numeritas conducted a thorough analysis of Schroders’ existing tools and data needs, and architected a new model that addressed their specific challenges. 

The new solution combines tenancy level inputs with property level assumptions to produce integrated financials and detailed performance reporting at a fund, sector, and property level. 

Dedicated risk reporting allows Schroders to continuously monitor the impact of changing assumptions. The model also supports informed decision-making through improved scenario analysis for various situations, including acquisitions, disposals, lease renewals, expiring contracts, market value fluctuations, and rental growth projections.

Results

Schroders Capital have reaped significant benefits since implementing the new model, and have used it extensively to drive buy/sell analysis, inform investment decisions, strengthen risk management, and streamline fund performance monitoring.

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