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Improving the Management System at a Real Estate Company

Situation

  • The client was a large heat energy company in Moscow interested in obtaining additional income out of its real estate
  • In 2012 the number of property assets held by the client increased 14% in connection with the merging of heat network assets with those of another company
  • Additionally the real estate assets were rarely used to obtain additional revenue: less than 2% of the property was being utilized

Goal

  • To form the key aims and objectives of the client in its real estate management project
  • To identify the efficient use criteria as well as the limitations in the company’s main property assets
  • To analyze the real estate at one pilot project center and investigate the assets in each group
  • To assess the possibilities of increasing the efficiency in use of property assets according to their asset group (including for rent, sale, reconstruction and for other uses)
  • To select the assets that will earn the most for the company, and assess the various options for altering these assets
  • To develop a program to implement the needed changes for all of the assets, as well as instructions on how to replicate the changes

Our Approach

  • The project consisted of two stages: 1. Assessment of the options for commercial use for the property and making recommendations for each group of property assets, 2. Development of an optimization program for the property assets. Following confirmation of the results from the pilot program, a new program was rolled out to implement the changes in all of the other property groups in the client’s two affiliates

Results 

  • Implementation of the best options in this priority project at the pilot branch led to a total economic effect (NPV to 2024) of 204 million roubles
  • The predicted economic effect from replicating this initiative using all of the client’s real estate assets, and depending on the amount of management and development the client wants over the assets, can range from 422 to 11,067 million roubles (NPV to 2024)

 

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