How Origin Investments Leverages Technology to Generate Returns
2012 was a big year for the private investment world. On April 5, 2012, the JOBS Act was passed, a new legislation that would change who has access to invest in privately held companies.
The JOBS Act inspired a number of entrepreneurs to create investment platforms where groups of accredited investors could pool smaller investment amounts to participate in anything from startup investments to commercial real estate investments that were traditionally out of reach for anyone who couldn’t write a $1M+ check. One of the more notable platforms to emerge from this movement is Origin Investments.
A track record of success
Origin has executed more than $900M in transactions and achieved 24% average net annualized returns since 2011. Their model is unique to other commercial real estate funds in that their funds are made up of accredited investors from all over the US who invest through their online portal. Investors sign up via Origin’s online portal, verify their accreditation, and have the opportunity to join various Origin funds as they open. Once committed to a fund, Origin makes capital calls like a more traditional fund would, but they also open up certain deals for co-investment if they have more room in the deal than what the fund can take. All of this is managed through their portal, which bolsters a seamless, and fairly enjoyable user experience.
I had the privilege of speaking with Marc Turner, Managing Director of Investment Management at Origin Investments, where we dove into all things Origin operations. Like any real estate operation, there is data flowing everywhere at Origin: from weekly leasing reports to FMV to return data. Marc’s team focuses on constantly improving their aggregation and reporting processes so that they can continue to differentiate the Origin investor experience from that of a traditional fund.
It’s about Visibility
For many funds, a typical LP report is old news. Marc and his team at Origin are changing that. Origin makes it a priority to produce informed, up-to-date LP reports on a quarterly basis and is actively investing in ways to make that reporting even more frequent.
Many firms produce reports that contain high-level information on investment performance that could be months old. Origin not only delivers reports in a timely manner, but they also reveal how the current performance compares to their initial projections and how they’re responding to changes in the market.
Investors have access to all portfolio updates through the Origin portal where they can reference asset summaries and review their capitalization details. Additionally, they host an annual investor event in Chicago. This event function as a sort of “State of the Union,” giving investors a forum to ask questions of fund performance, state of the market, understand Origin’s competitive advantages, and investment management.
More than just FMV
Marc’s goal for Origin’s investment management team is to have access to data in real-time. Reporting, both internally and to investors, isn’t just about FMV and return data. It’s about providing information on how actual performance compares to their original plan as that plan is unfolding.
It’s about asking questions like, “How are we adjusting to the market?” and “How do these adjustments impact returns?”
These questions can only be answered by having access to changing data sets like leasing efforts and occupancy rates.
Data on real estate assets comes in different formats and frequencies. Aggregating and analyzing these data sets is a challenge for any asset manager and the reason for our work at Malartu.
Internal operations teams like the one at Origin receive monthly updates from property management teams about the performance of their properties. At Origin, they also receive weekly leasing updates from the various managers in their portfolio. These updates all come in different formats, so there’s a good bit of effort and technology needed to make sense of this data in real-time. Aggregating these reports frequently isn’t just important for updating general and limited partners, it’s necessary to make the best operating decisions for these properties on a weekly basis. How can we use this information to inform investment decisions we’re making now? How can we fix small issues before they become critical? How do we use this data to improve our tenant experience? By investing in data aggregation and continuing to build out their platform, Origin is able to answer these questions. Access to granular data keeps their investment team informed and producing top-tier results.
Investing in Technology to Better All Areas of Your Operation
While Origin invests many resources in bettering their investor experience and the performance of their internal operations teams, they’re also constantly searching for ways to improve their tenant experience. In Marc’s experience, many real estate investors have been slow to adopt smart home tech and concierge tech that provide better living experiences. Origin is looking to change that.
The way Marc sees it, investing in tenant experience doesn’t just make people happier, it also creates more revenue streams for Origin investors. Better experience equals higher retention. With the processes Marc is working to put in place, not only will they be able to create a better experience, but they will be able to tie those benefits to their portfolio performance data.
Leveraging Your Data
From LP reporting, to weekly leasing updates, to adjusting your business plan, to tenant experience... it’s all about data. The days of financial engineering and pump-and-dump are over, it’s about building value in every one of your investments from commercial offices to multi-family properties. Managing the plethora of data available to asset managers is a challenge, but an exciting one for groups who leverage technology and systems to realize the insights that data can offer. As evidenced by Origin Investments, it’s an exciting time to be a real estate investor.