By Meghan Hall
The past couple of years has brought an explosion of tech into the commercial real estate market. Many of these new technologies seek to accomplish similar goals, including increasing transparency and efficiency. For tech firms that have established themselves in the market, such as Juniper Square, a huge part of success is anticipating how the industry will respond to new technologies. The Registry spoke with Juniper Square’s Vice President of Investor Services Vittoria Reimers on the firm’s fund administration service and its plans for continued growth.
Please tell The Registry a little bit about Juniper Square. What prompted the launching of the first-ever technology driven fund administration service designed for the CRE industry?
Juniper Square is transforming the private funds industry with investment management software for commercial real estate. Leading investment sponsors like Tishman Speyer, Rockpoint and Beacon Capital use our software to manage more than $1 trillion in real estate investments across more than 160,000 investors.
I joined the company last year to identify new ways to engage with investment managers and accelerate their efforts to modernize their front and back office. One of the common challenges I found when speaking to General Partners (GPs) was that while they were excited to modernize the interface they used for communicating with investors, they were struggling to find fund administration partners that were thinking about services in a tech-forward way. As a result, I worked with the leadership team at Juniper Square to build a roadmap for closing that gap, which led us to the launch of this new service.
Why do you think no such technology existed prior?
For years now, fund administration has been viewed purely as a services business, and that view is a reflection of the market participants and their evolution. Most fund administrators grew up as services providers, and today they purchase or occasionally build software to enhance their internal efficiency. We started from a fundamentally different position.
We wanted to re-imagine what fund administration could be if we started from the lens of the investor and GP experience and asked—how could we build a more seamless and transparent service with software? By focusing on improving the overall experience, as opposed to just cost savings, we’ve been able to create something unique in the market.
What are some of the processes that fund administrators have typically adhered to that have made the process inefficient?
One of the easiest processes to consider is how partnership accounting results are shared with sponsors and investors. For example, allocations of partners’ capital are typically generated in spreadsheets, double-checked by the investment sponsor in a separate spreadsheet (a process known as “shadow accounting”), and then shared with the investor in static PDFs. Here we see how the reliance on error-prone spreadsheets increases turnaround times and inhibits trust, which is then exacerbated by multiple handoffs across multiple parties.
Through our service, we make that process seamless by providing a full record of the accounting operations within our software. That allows the sponsor to spot check our work without having to recreate it in a spreadsheet. And it allows their investors to drill down into details rather than having to go back and forth over email asking for clarification. Everyone is seeing the same numbers, presented the same way. The whole process is not only more efficient, it’s also more transparent. And by delivering stronger controls it allows you to reduce risk and inspire more confidence.
Juniper Square is currently marketing the technology as a “build-to-suit” fund administration service. Can you a little bit about how this new software works or give examples of how the platform could operate for different investors?
As we’ve built the service, we’ve tried to think beyond the traditional accounting and treasury needs associated with fund administration by exploring what sponsors’ needs are and how we can more fully address them.
A good example of this is the subscriptions process. Today, investors who want to subscribe to a private investment offering are often asked to fill out lengthy forms and submit documentation for regulatory checks—a process which is not only time consuming but also error prone. In our most recent survey, the majority of respondents reported spending 1-4 hours just processing subscriptions. We’ve worked to modernize this process through software that captures the investor information in an online form, coupled with services to perform compliance checks on the back end. This allows sponsors to focus on their fundraise, as opposed to their paperwork.
By how much can Juniper Square help to resolve current inefficiencies in fund administration?
Our technology-first approach delivers both absolute and relative efficiency gains. One customer estimates that Juniper Square reduces his time spent on administrative tasks by 75 percent and delivers 40 to 50 percent time savings over traditional fund administrators. And this is just the start. We believe that over time we can improve efficiencies for more areas of the GP’s business– areas that may not have been addressed by traditional fund administrators in the past.
What are some of the challenges that companies such as Juniper Square face when working to create new CRE-related technologies? How has Juniper Square worked to overcome them?
Most people would agree that the commercial real estate industry has been slow to adopt technology. We’ve worked to overcome this challenge by ensuring that we grow with our customers. No one is going to adopt technology for technology’s sake. It has to solve real world problems that our customers face today, in addition to solving for the future.
A good example of this would be consent to electronic notification. In the future, it’s hard to see a world where someone doesn’t consent to electronic notification for delivery of K-1s. But today, in the real world, a large number of investors elect not to take that option. That means it’s not enough for us to be able to append K-1 to our investor portal. We have to be able to track who does and doesn’t consent to delivery, and manage their preferences accordingly. That may seem obvious, but unless you can do that, you aren’t meeting your customer where they are today and you aren’t helping them grow towards the future.
Juniper Square recently surpassed $1 trillion in managed assets. Looking ahead, how does Juniper Square plan to grow? Why?
We have multiple products that we are working on currently with clients. Since the beginning, our model has been to co-develop software with our customers. With our initial product, we underwent two years of development before publicly launching. That client-first development approach is what has fueled our rapid growth over the last three years. We’ll have more to share when we finalize some of the products in development now. It’s fair to say, however, that they will be focused on the needs of the commercial real estate industry and driving more transparency, accessibility and efficiency for all participants.
In a world where CRE tech is becoming increasingly popular, what strategies is Juniper square implementing to remain competitive?
Over the next three-to-five years we aim to broaden our offerings to deliver more comprehensive investment management solutions for the commercial real estate market. That includes products and offerings that will help GPs and Limited Partners (LPs) better share information and transact.
One of the biggest opportunities here is moving beyond investment reporting to asset reporting. Many GPs struggle to aggregate and share asset data at the level of granularity required by LPs. Over time, we can help them to consolidate and organize this data, and use it to glean insights that will help drive their businesses and generate reporting that will provide more transparency for investors.