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IMN West Real Estate CFO & COO Forum

The importance of participation at industry conferences is critical to help us to stay abreast of industry developments and meet professional goals.

On 16-17 May, the IMN West Real Estate CFO & COO Forum was hosted in Santa Monica, California, and professionals from SS&C’s Real Assets team were there offering insight as panelist participants in two separate sessions: technology and opportunity zones.

Technology Innovation

As technology continues to evolve, Jeff Schrumm participated in a discussion that highlighted the importance of and value in creating intricate partnerships between investment managers and fund administrators. 

The discussion veered toward the utilization of applications to enable best practices in administration.  Industry managers discussed increasing requests for data as a broad theme in the industry.  While there was acknowledgement that smart and experienced individuals are a key element in a successful outsourced partner, it was also clear that empowering those people with fit-for-purpose technology was not far behind.  As real estate fund managers continue to shift more operations to an outsourced model, it is imperative that service providers invest in and deploy the best technology available—fund managers are taking note. 

After listening to the panelists and speaking with attendees, there can be no doubt that the real estate industry has fully embraced the use of technology.  From leveraging big data and algorithms to predict when owners will put their houses on the market to allowing individuals to invest in properties using their phones, the application of tech was a theme that ran through most of the panels and discussions.

Opportunity Zones

In the evolving landscape of Opportunity Zones, Amy Pearce participated in a discussion that focused on the intricacies of investing in opportunity zones, including tax and accounting considerations, structuring, and reporting.

Topics of focus included:

  1. An overview of the tax regulation with a focus on the latest clarifications issued in April

In December 2017 the Tax Cuts and Jobs Act provide for Opportunity Zone provisions—investing in a Qualified Opportunity Fund may allow taxpayers to roll over capital gain, defer gain recognition and associated tax liability until up to 2026 and exclude from taxation a portion of such deferred gain and exclude from taxation any appreciation realized on the investment in the QOF. 

  1. Fund and fee structuring

Much of the panel discussion focused on the structures we are seeing in the market, which vary from programmatic to single asset and comingled funds structured as a two tiered LLC.  We are seeing both open and closed ended funds structures.  In most cases the panel members have experienced, the management fees are being paid outside the fund to enable LPs to fund management fees with unqualified dollars. 

  1. Anticipation of future guidance in September

The tax specialist on the panel made predictions on what they are expecting in the next set of regulation clarifications in September.  Most felt there would not be any significant changes or further clarifications in regards to the topics in April’s release but more focused on the exit strategy—the sale of the qualified opportunity zone property in the secondary market.

These discussions are valuable to the conference attendees and panelists, and to me as I continue to build the real assets business at SS&C.  I value the managers’ perspective and the approach as they look to partner with a fund administrator that can provide solutions for continued growth.  It helps us as a prospective vendor to define and represent solutions that work for our clients.

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