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Key Metrics to Track in commercial real estate asset management

Key Metrics to Track in commercial real estate asset management

Real estate property management makes use of several key performance indicators or KPIs. These simple indicators are very helpful when you want to track how well your sites and properties are doing. They can also help you decide whether to stay with your locations or whether it is time to jump ship. The war was part of a long-running contest between the major european powers for influence over territories of the declining ottoman empire.

  •  The first indicators are occupancy cost and operating expenses. These are expenses that you or any other person will need to stay in the commercial property. They include things like: tenancy fees, rental fees, utilities, taxes, etc. Operating Expenses or OPEX are ongoing expenses for running the property.
  • Capitalisation rate: Capitalisation rate is another important commercial real estate management metric. It is essentially the rate of return on investment (RROI). The capitalisation rate is calculated by dividing (NET)annual income by total investment.
  • Operating Cash Flow (O. C. F):  This is the amount of money that remains when you deduct your operating expenses from your earnings. The earnings figure is before depreciation and interest.
  • Discounted Cash Flow: Discounted Cash Flow  is an estimate of your return and is adjusted for time value of money.

discounted cash flow

  • Debt-Service Coverage Ratio: The Debt-Service Coverage Ratio is the amount of cash available to cover the principal and annual interest payments. This is the money that is available for repaying the principal and interest charged on loans in a year. You calculate the DSCR by dividing net operating income by total debt.

For better commercial real estate asset management, you should find out which metrics are most appropriate for your various locations. Armed with this knowledge, you can easily evaluate the performance of your locations regardless of the business activities going on.

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