The REIT Case for External Property Management
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“Brand is important to them,” Genova says about REITs.
LOS ANGELES—For many publicly traded REITs, the mandate of internal management extends all the way down to the asset level. Yet a study commissioned by CBRE finds that third-party property management warrants a closer look by REITs.
“In many cases, REITs can increase NOI and FFO under the external property management model,” writes David Fick, professor at Johns Hopkins University Carey Business School and former head of REIT research at Legg Mason Real Estate Group. Specifically, Fick found that REITs can save as much as 62% for direct labor costs, for example, or 8% for engineering and janitorial services, when outsourcing property management…
