Portfolio monetization strategy and operating model refinement

The situation

A GCC sovereign investor with a multi-billion dollar portfolio of local and international real estate and infrastructure assets was seeking to balance its portfolio. With a heavy concentration in the local geography, the group requested a monetization strategy for the local portfolio; the client also wanted a new target operating model that would enable it to achieve the defined strategy.

How we helped

The Strategy& team began with a baseline of the local portfolio to derive insights on its financial performance, then conducted an assessment of the local real estate market to forecast the size of future market gaps by segment and class, estimating the evolution of the cap rates by segment for the next 10 years. To pinpoint the optimal monetization year for each asset, the team reviewed and refined the individual business plan forecasts — taking into consideration the market conditions and strategic alignment with the fund — yielding a plan for each asset that would maximize the monetization value. For the operating model, the team located the root causes of inefficiency and singled out the improvement opportunities; along with a benchmark of best practices at real estate investment companies across operating model dimensions, the team used this information to develop a new target structure for the fund.

Results

The monetization plan was approved and quickly put into action.