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Review: Introduction to Portfolio Management - 11 September

11 September 2008 at Herman Miller, 61 Aldwych, London WC2.

Introduced by:     Ian Smith, VP Programmes

Speakers:            John Scott, CB Richard Ellis
                            Ron Adam, CoreNet Global

This was a second quick canter through the outlines of another of CoreNet Global's MCR courses.   Normally held over two days, this was more like a two-hour gallop followed closely by an audience sometimes gasping to keep up.

Kicking off with an explanation of the term ‘Portfolio Management', Ron reminded us of the different meanings a property portfolio has for the various interested parties, from traditional facilities management to shareholder value: daily property management, to productive space, to a cost or a valued asset.   The CRE's aim should be, he said, to get to Markowitz's ‘efficient frontier; the three core objectives in achieving this should be to maximise utility, minimise cost and mitigate risk.   First task is to develop a plan for which you need an inventory of assets  - surprising, he noted, how many corporates don't have such an inventory, because without one it is difficult to take the longer term view. 

Taking over, John provided a brief outline of the five key guiding principles that apply:

1. CRE is first a factor of production
2. Duration of occupation  - not ‘own v. lease' but ‘long v. short'
3. Analyse clusters not just assets
4. Manage duration by cluster
5. Financial management 

In conclusion he pointed out that financial structures should match demand uncertainty, the primary investment objective is to minimise real estate bets and that duration should be managed at cluster level rather than that of individual assets.

Ron's examination of business strategy demand defined four key questions  - What, How Much, Where and When?  This led on to the need to master the integration and optimisation of multiple variables and disciplines  - the complexity of which he demonstrated with a flow diagram.

For a look at the tools required to undertake portfolio management, John provided a brief overview.   Among other necessary tools he emphasised the importance of good information, good data, and their use to provide good forecasting, concluding with the sage advice ‘don't boil the ocean'  - that is, ‘don't try to do too much'.

Finally Ron wound up with a session on ‘how to do it'.   Most important he said was to create a charter, develop a planning process and produce the necessary information, in a format that management understands  - that is not square feet but £s or staff numbers.    ‘Talk their language' he said, ‘and they will understand what you are saying'.

The next two-day MCR course is in Frankfurt in June 2009.  

For further information contact: radam@corenetglobal.org

Go to Workplace TV, http://www.workplacetv.com, to watch the (edited) highlights!