It's All Relative

Every business needs to know where it stacks up against its peers in the industry. But what is the best way to get a true “apples-to-apples” comparison? How can you truly measure the relative differences among competing firms, and, having done so, how should you communicate the results in the most appropriate fashion? Kingsley Associates has undertaken the task of critiquing three common approaches to peer comparison, including some of their advantages and pitfalls, and why we, as a firm, have elected to use one approach over the others.

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Slowdown? What Slowdown?

Kingsley Associates, in conjunction with Institutional Real Estate Inc., recently completed the 2006 Plan Sponsor Survey, a survey of tax-exempt investors conducted annually since 1993. The results reveal that real estate remains the favored asset class of tax-exempt investors based on a combination of risk-adjusted returns and healthy cash yields.

An important implication of the survey is that, despite all the buzz about the “real estate bubble”, investors should expect sustained competition for property acquisitions in 2006, keeping cap rates at low levels. Other points of interest from the findings include:

The intense competition and high pricing for core assets has pushed institutional investors to look beyond core into higher yield (value-add and opportunistic) strategies and foreign investments
Investors are emphasizing pooled fund investments in these higher yield strategies as they strive to reach their target real estate allocations
This in turn has led pension funds with limited staff to increase the number of investment manager relationships per staff member

Given the weight of new capital coming to market, pension fund staff will feel increasingly challenged to identify attractive opportunities and oversee their growing stables of investment manager relationships.

SMART Success

Strategic planning is a vital exercise for any organization that hopes to achieve and maintain success, and good strategic planning involves establishing and meeting goals. This is difficult enough by itself, but many firms make it nearly impossible because they set goals that don’t make sense.

In 1954, Peter Drucker developed a very effective tool to use in goal setting using the acronym SMART (Specific, Measurable, Achievable, Realistic, and Time-bound). Consider the following hypothetical example, which illustrates just how valuable remembering this acronym can be: A strategic planning session centered around the need to improve client communication.

The not-so-smart way of stating the goal would be “improve client communication.” This isn’t very useful – it’s not specific enough, it doesn’t provide a way to measure its achievement, and it isn’t bound by a deadline. A SMART way of stating the goal would be “establish quarterly face-to-face meetings with clients by the end of Q2 2006.” See the difference? It is easy to understand what the objective is and how to meet it, and equally easy to determine whether or not it has been met within the allotted time.

Don’t underestimate the importance of the “T”. Absent a stated deadline, one of two things will almost always happen. The goal may be met until the last possible minute, creating chaos in other important areas. More likely, the same objective will just end up on the list again at the next strategic planning session. So, be SMART and enjoy success!

Are Single or Married Residents More Satisfied?

Single residents living alone give higher ratings than their married counterparts. Single residents living with a roommate tend to rate their satisfaction more like married residents.