Jun 25, 2021

Overview

The client, a state investment board that manages the assets of several state trust funds, including the state retirement system, had built up a real estate portfolio of direct investments, limited partnership investments, pooled funds, REITs, real estate debt, and funds of commercial mortgage-backed securities.

The diversity of these investments, and the difficulty acquiring timely data at relevant levels of granularity, rendered its investment processing systems and processes cumbersome and inefficient, particularly in the areas of reporting, risk management, and investment decision-making.

The client asked Cutter Associates to help find or develop a solution to facilitate better investment decisions and to support risk management with consolidated reporting.

Cutter Solution

We began by assessing existing workflows and meeting with key stakeholders from portfolio management and operations to discuss pain points and requirements. We then reviewed different vendor solutions and their capabilities for meeting the client’s specific requirements.

We came up with two approaches for our client to consider ─ make incremental improvements to its existing systems and infrastructure and, second, invest in a front-to-back vendor solution to manage all aspects of processing real estate investments, from deal capture and portfolio analysis to capital calls processing and ongoing financial reporting. After we reviewed the pros and cons of the two options with the board, it agreed to move forward with Cutter’s recommendation for a front-to-back vendor solution.

With the client further engaging us to help select the specific vendor solution best suited to meet its unique requirements, Cutter took the following steps:

  • Came up with a list of viable vendor solutions
  • Re-examined Cutter Research reports on alternative investments and collateral produced in prior vendor selection engagements
  • Created a comprehensive RFP that we distributed to vendors
  • Evaluated RFP responses using detailed criteria we had defined with our client, narrowing the list to two vendors with the most potential
  • Created a demonstration scenario reflecting our client’s requirements and invited the two finalists to demonstrate their solutions’ functionality in the context of that scenario at our client’s site
  • Evaluated the products during the demonstrations and delivered our findings, including comparisons of pros, cons, and costs, along with an initial recommendation for the best vendor

After following up with the recommended vendor to clarify some information, and coordinating reference checks with the vendor’s customers, we made a final recommendation. We then designed a roadmap for implementing the vendor solution, including target state business process workflows and requirements to prepare for implementation, as well as estimated costs, resource requirements, and implementation time requirements.

With our help, our client was able to find the vendor solution that best met its unique strategic and tactical objectives to support its real estate investments. We prepared our client for the implementation with our roadmap and target state workflows and requirements. By capitalizing on collateral created in prior vendor selection engagements, and on vendor-agnostic Cutter Research on alternative investments, we reduced our client’s costs for the selection process and increased the investment board’s confidence that it was making the right decisions.

Want to speak with a Cutter consultant to learn more about this topic or how we can help you? Contact us at connect@cutterassociates.com.