Forecasting technology pays off for Hartz Mountain Industries utilizing Yardi

Since 2009, retail, office, industrial, hotel and multifamily property owner and manager Hartz Mountain Industries, Inc. has steadily invested in technologies that provide faster access to information and automate recoveries and other business operations. New York Real Estate Journal recently asked Larry Garb, executive vice president for Hartz, for an update on the latest way that the company used technology to operate more efficiently. Q: Larry, can you tell us briefly about the scope of Hartz Mountain’s business? A: Hartz owns and manages one of the largest privately held commercial real estate portfolios in the U.S., with about 200 properties totaling more than 35 million s/f primarily in the northern New Jersey/New York area. Q: What business process did you hope to improve? A: One of our primary management tools is a 10-year cash flow projection of our entire portfolio. We do this twice annually and we roll up by location, asset class and property type. Doing this project every six months was a real monster. We had three analysts spending about 50 or 60% of their time on these cash flow projections. They’d have to take data from our system, look at lease abstracts and other material to create the cash flow forecasts, manually load them into a forecast system, and export that to a spreadsheet. The rollups often had errors because of the manual processes involved in creating them. Q: What did you do to improve the process? A. We saw that Yardi Advanced Budgeting & Forecasting would dramatically cut the time it took to prepare those books by drawing the leasing, recovery, property and mortgage data directly from our database. Q: What were the results of the new solution? A: By expanding our Yardi Voyager platform with the Advanced Budgeting & Forecasting product, we have been able to cut down from three people working up to 60% of their time to one person working about 75% of her time on the project. And we get what I believe is a better product in our 10-year forecasts. We increased the forecasts’ accuracy because if the rent’s wrong in the forecasts, that would mean the rent we’re billing the tenants is wrong because it’s coming from the same data. Q: What is the advantage of using an automated forecasting tool? A: The clear advantage is that we’re taking data right from our live commercial database—the leases, the debt, the property operating expenses. There’s no manual keying. The speed of it is tremendous, and there’s no human error when we’re transmitting the data. Then, once the data is in the forecasting tool, you can slice and dice it and change assumptions seamlessly. Also, AB&F has very much a Voyager feel to it, so the look and feel is very similar for users accustomed to using the core Voyager product. Q: How is the forecast information used? A: If an executive asks to see a rollup or valuation of four or five properties as a group, we can do that almost instantaneously. And we can sensitize the data and say, “What’s going to happen if our general vacancy goes up by a point, or if our credit loss goes up by a point, or if we adjust this cap rate by half a point?” We can get those answers quickly and easily. Larry Garb is executive vice president - administration at Hartz Mountain Industries, Inc., Secaucus, N.J.