Members of iREOC focus on partnership challenges at annual meeting

Partnership, and the expectations and challenges involved, was the theme on the first day of the Institute for Real Estate Operating Companies’ 2019 iREOC Annual Membership Meeting, held May 14 through May 16 in Park City, Utah.

The day opened with a meeting of iREOC’s Board of Governors, introducing the members of the institute’s three councils — the Investor Advisory Council, Investment Manager Council and Real Estate Operator Council. Spotlights on members of the institute’s three councils were an opportunity for members of the Board of Governors to profile their business, as well as their greatest challenges. Finally, all attendees participated in a town hall meeting to discuss the issues most relevant to attendees.

The Institute for Real Estate Operating Companies (iREOC) brings together capital providers — investors and investment managers — with operating partners. The capital providers discussed their desire to support and mentor real estate operating companies, to create durability in their organizations and get beyond being a “manufacturing” business. Operating partners discussed their need to develop relationships with investors. As one noted, “You can’t just walk in and ask for a check.” Instead, the relationship between capital provider and operating partner has to be developed over time. Another challenge facing REOCs is the current real estate operating environment. Prices are high across the board, and some operators spoke about how investors may need to temper their return expectations as the real estate cycle gets long in the tooth.

Investors described their process for evaluating operators, as they are looking for a certain level of sophistication. One spoke about a lengthy underwriting process to assess not only where an operator is now, but where that firm is going in the future.

Another investor said, “When you find a good partner, you want to keep them.” The goal is not only to establish a relationship, but to make that partnership last over the long term.

The intent of the first day of the annual meeting of iREOC was to “set the stage,” explained David “Mac” McWhorter, executive director of iREOC. In the following days, attendees will have the opportunity to dig deeper into some of the questions raised on the first day, as well as to build the relationships across organizations that underlie a successful partnership.