Expenses expected to rise in 2019
Real estate investment managers are expected to see post-bonus EBITDA margins compress further in 2019, as research begins on the 2019 NAREIM/FPL Associates Global Management Survey.
Expenses at real estate investment management firms are expected to rise further in 2019 putting additional pressure on EBITDA margins.
While almost all firms experienced year-over-year revenue increases in 2018, it came against a backdrop of increasing expenses, not least rising compensation costs. As a result, more than half of firms reported flat or decreasing post-bonus EBITDA figures for the 2018 Global Management Survey.
It’s a trend NAREIM and FPL Associates will be focused on as research begins on the 2019 survey, which benchmarks operational and financial metrics within the real estate investment management industry.
Erin Green, senior director at FPL and lead researcher on the Global Management Survey, said it wasn’t just compensation expenses but also “new product lines, increased reporting and regulatory requirements – these are all additional cost pressures the managers are grappling with and you’re starting to see it impact the bottom line.”
Last year’s survey came at a time when capital raising was moderating for many NAREIM members, a trend Green said could change in 2019.
“Anecdotally, we’ve seen a resurgence in capital raising activity [since April 2018 when the Global Management Survey data was submitted],” said Green.
“In 2018, aggregate capital raising declined by 6 percent and 52 percent of firms said capital raising was flat or down year-over-year. We’ll very much be watching to see what happens to those figures and where the capital is going – into which strategies and vehicle types, because this all provides very important indicators for the type of climate we are in,” she added.
The submission deadline for the 2019 Global Management Survey is March 28, 2019. The report and findings will be released in August 2019. For more information on the survey, contact Zoe Hughes, NAREIM CEO.
- Click here for key findings from the 2018 Global Management Survey (NAREIM member portal, log-in required).
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