“I write to discover what I think. After all, the bars aren’t open that early.” This is a well-known quote from American historian Daniel Boorstin and it’s exactly why I write this blog. I write about topics I find interesting, and the writing process enables me to tighten up my thinking.
Some of my favorite posts such as the future of urban living, the impact autonomous cars will have on the built environment, and how to be an entreployee within your firm were ideas that I was interested in and wanted to vet further. I have a deep passion for unique housing models, I’m fascinated by the potential impact of self-driving cars, and I strive every day to be an entreployee. There’s no better way to improve my thinking than to write about these topics for an audience that is assumed to have little understanding of them.
One of my many responsibilities at Atlas is drafting quarterly investor letters. I just finished writing the Q3 letters, and although crafting them on a quarterly basis is cumbersome, it’s probably the single most valuable asset management activity. It forces me to step back and view the big picture of the investment that can get lost in the day-to-day minutia of a deal.
Our typical quarterly letter for multifamily deals include an operations, renovation, and a market update. The operations section includes detail of the drivers behind revenue/expense changes quarter-over-quarter and year-over-year. The challenge is concisely articulated the dynamics impacting deal performance in a way that’s both easy to understand and enjoyable to read. It requires a deep understanding of the key metrics impacting revenues and expenses. Through the writing process, I typically uncover operational issues, come up with creative marketing ideas, and generally gain a deeper understanding of deal performance. It enables me to reassess how we’re doing versus our intended business plan and set goals for the next 3-6 months.
On the renovation side, I assess our progress and gain better insight as to how the various puzzle pieces are coming together. We typically take a four-pronged renovation approach includes deferred maintenance, energy efficiency, exterior cosmetics/amenities, and interior upgrades. We tackle these concurrently with the goal of repositioning the asset, popping NOI, and refinancing as quickly as possible. Between these four activities there a million small projects. While writing the quarterly letter, I look at everything that’s been accomplished and explain how each gets us closer to our near-term goal of a refi.
Stepping back from the property-level, I also learn quite a bit when drafting the market section. I view the latest market stats such as population, employment, and income growth. I also reassess the investment sales market to get a better sense of the demand for similar assets to ensure our thesis is playing out as expected. I look at the construction pipeline including both permits issued and deals under construction. I typically glean some unique insights from this process that informs how we approach the repositioning.
It typically takes several hours per letter, but it’s worth it. The quarterly letter is written for high-net-worth investors who have little or no professional experience in real estate, know little about the asset and submarket, and haven’t thought about the deal since the previous letter.
Selfishly, the writing process allows me to better understand deal performance, confirm the renovation progress, and update myself on the market.