Case Studies
Building Smarter Performance Monitoring for a Growing CRE Fund
Client Challenge
A mid-sized private equity real estate sponsor managing a portfolio of mixed-use assets was struggling to track fund performance as its operations scaled. Reporting processes were manual and inconsistent, making it difficult to calculate key metrics like IRR and cash-on-cash returns. Disconnected spreadsheets delayed updates and created blind spots just as investor demands and fundraising activity were increasing.
Our Action
Lexcraft Advisors partnered with the sponsor to build a centralized performance monitoring framework tailored to their fund structure and reporting needs. We began by reviewing data sources, reporting workflows, and investor requirements. Then our team collaborated with the sponsor to define a core set of key performance indicators (KPIs) including IRR, equity multiple, cash-on-cash return. With these benchmarks established, we helped to develop a custom reporting model that automated calculations and standardized outputs across deals. We also created a unified dashboard, which gave the sponsor a tool to track performance at scale.
Client Outcome
Within one quarter, the sponsor rolled out the new KPI framework to internal stakeholders and began incorporating a slate of performance metrics into investor reporting. Investor updates became more informative, built credibility, and reduced the volume of follow-up questions. Additionally, internal meetings were more focused and data-driven, enabling better decision-making at both the fund and asset levels. The sponsor now has a scalable reporting infrastructure that positions them as a more sophisticated operator in the eyes of institutional LPs, which they are targeting in an ongoing $100 million fundraise.
Managing the Final Mile: Liquidation Support for a Successful Disposition
Client Challenge
A sponsor managing a $15M single-asset industrial syndication was preparing to liquidate the operation following the successful sale of the property. While the disposition exceeded the projected IRR net to limited partners, the sponsor now faced a high-stakes, detailed step: initiating final capital distributions and winding down the legal entity. The operating agreement included a multi-tiered distribution waterfall with preferred returns, catch-up provisions, and a promote requiring precise calculations and thorough documentation. Without the internal infrastructure to administer the liquidation and wind down the legal entity, the sponsor risked compliance issues, investor confusion, and reputational damage.
Our Action
The Lexcraft team stepped in to manage the liquidation event from start to finish. Our team began by reviewing foundational documents, including the operating agreement to understand the waterfall structure and whether the final distribution event involved any special considerations. Next, we worked with the sponsor to confirm the contributed equity amounts for every limited partner as well as the general partner entity. Our team also created a waterfall model and applied the final cash distribution to calculate the amounts to apply to each waterfall step. Finally, we implemented a system to track each liquidation transaction, ensuring transparency and traceability throughout the process.
Client Result
By partnering with Lexcraft, the sponsor successfully closed out the syndicated investment with full compliance, no disputes, and positive feedback from investors. Every distribution was made on schedule and fully documented, and the legal entity was dissolved without additional complication. With the burden of liquidation administration lifted, the sponsor was able to focus on launching the next investment offering.
Enhancing Portfolio Performance Through Asset Management Analysis
Client Challenge
A sponsor managing a $50M portfolio of multifamily assets faced a common challenge. The in-house property management team was working hard to oversee day-to-day operations, but they lacked the tools to establish benchmarks and measure asset performance in a structured way. Without these insights, the sponsor struggled to pinpoint inefficiencies, optimize expenses, and identify opportunities to drive top-line growth. Despite solid property management practices, they wanted to understand where strategic changes could be made to improve portfolio performance.
Our Action
The Lexcraft team conducted a comprehensive asset management analysis to provide the sponsor with a holistic view of portfolio performance and recommendations designed to target key operating metrics. Our team began by performing an in-depth review of historical operating data to identify performance trends across several metrics. The analysis highlighted ineffective expense management as well as delinquency trends that were negatively impacting net operating income.
To address these issues, our team developed forward-looking financial projections that enabled the sponsor to calibrate a series of performance metrics and understand the probable impact of each on NOI. This tool allowed the sponsor to make data-driven decisions about the cost structure at the portfolio level and think through operational changes to better manage delinquency.
Client Outcome
With our insights and recommendations, the sponsor implemented targeted improvements that led to an 8% reduction in portfolio-wide delinquency within four months. Coupled with the rollout of cost-conscious expense management procedures, our client improved portfolio-level net operating income by 14% within six months of the conclusion of the analysis. By implementing a data-driven approach, our client gained a competitive edge, ensuring the portfolio was well-managed and strategically positioned for long-term success.
Enhancing Performance Monitoring with Custom KPIs
Client Challenge
A mid-sized private equity real estate firm managing multiple funds comprised of different asset classes struggled with performance monitoring. Their existing reporting framework lacked meaningful key performance indicators (KPIs), which limited the sponsor’s ability to issue comprehensive investor updates and to benchmark performance effectively. The client was also hamstrung by multiple data sources that lacked standardized data structures.
Our Action
Our team partnered with the firm to design and implement a comprehensive KPI framework tailored to their investment strategy and reporting needs. We conducted stakeholder interviews to define KPI use cases and identify data sources. Using this information, we developed a suite of KPIs aligned to the firm’s reporting and performance monitoring objectives. We created a template with embedded calculations to allow users to update the underlying data and quickly generate a refreshed metric summary. We also built a series of visually-oriented dashboards to enhance preexisting investor reporting templates. Finally, we drafted a metrics dictionary that documented data sources, explanations of underlying calculations, and a use case summary for each metric.
Client Result
Upon the completion of the project, our client’s performance monitoring capabilities were transformed. Regular KPI updates enabled more transparent and consistent investor reporting, and improved performance monitoring capabilities empowered leadership to make informed asset management decisions. The automated nature of the template we delivered allowed non-technical users to take ownership over the monthly KPI refresh. The investor base responded positively to an enhanced reporting package, and a higher level of investor engagement became evident within two reporting cycles. By working with our team to implement a tailored KPI framework, our client optimized internal performance tracking and also strengthened relationships with investors, both of which bode well for future growth plans.
Enhancing Investor Reporting to Focus on Transparency and Trust
Client Challenge
A private equity real estate sponsor managing a $12 million multifamily-focused fund faced challenges with investor communications. The existing quarterly reporting process relied heavily on spreadsheets for tracking property metrics and ad-hoc commentary and updates from the property manager. This approach led to delays in delivering reporting to investors and resulted in reports that contained inconsistent data from one iteration to the next. Investors were requesting more transparency on asset performance, more frequent updates on capital improvements, and improved fund-level insights. The sponsor struggled to compile this information in a digestible format and adhere to a consistent reporting schedule.
Our Action
Our team stepped in to revamp the investor reporting process. First, we collaborated with the sponsor to develop a customized reporting template to align with the brand identity and communication style. The template included key performance indicators, detailed asset updates, and market insights tailored to the investors’ priorities.Next, we standardized the reporting schedule and drafted quarterly communications that delivered clear, concise, and data-rich updates. To ensure accuracy, we worked directly with the sponsor’s property managers to compile data from multiple locations into a single, comprehensive data source. With this information our team was able to distribute reports on a timely basis via the sponsor’s investor portal, and this ensured all stakeholders received updates simultaneously through a secure channel.
Client Outcome
With our support, the sponsor transformed the investor communication workflow. Reports are now delivered on time, with consistent branding and thoughtful messaging. The comprehensive template has improved the efficiency around data gathering, while ensuring the most pertinent information is included in the quarterly reports. The revamped workflow has successfully addressed investors’ key concerns with the original reporting package, significantly reduced follow-up questions, and spurred more productive discussions between the sponsor and the investor base.
Commercial Real Estate Fund ($20 million EUM)
Client Challenge
Our client, a recently formed $20 million private equity real estate fund, was preparing to execute the initial capital call after successfully securing investor commitments and moving forward with an acquisition. As a first-time fund manager, the sponsor faced uncertainty in determining the optimal call size to meet immediate funding requirements. Much of the uncertainty stemmed from the need to call enough capital to complete the acquisition and simultaneously establish an operating reserve for fund expenses. Ongoing operating expenses had not been thoroughly modeled against expected fee revenue, and it was becoming apparent that several vendors and outside service providers would be needed to support ongoing operations.
Our Action
Our team developed a financial model to project fee revenue and fund operating expenses. Our team reviewed the fund’s fee structure and worked with the sponsor to agree on a series of assumptions about the timing and magnitude of fee trigger events, including acquisitions, dispositions, and other capital events. Projecting fee revenue provided a baseline for understanding the cash inflows available to support fund operations. The model also forecasted operating expenses over the expected life of the fund and incorporated fixed and variable costs. Fixed costs included recurring expenses such as fund administration, tax, and legal fees. Variable costs included acquisition-driven expenses such as due diligence and third-party consulting services. Our team worked with the sponsor’s vendors to obtain cost estimates and converted this information into model inputs.
Client Result
Using the model output, our team was able to provide guidance to assist the sponsor with sizing the operating reserve, and it was ultimately decided to establish a reserve to cover a minimum of twelve months of fund expenses in a worst-case scenario. By working with our team to complete a modeling exercise that incorporated realistic fee and expense assumptions, the sponsor was able to confidently size the initial capital call to meet acquisition funding requirements and create an operating reserve without calling excess capital from investors.
Commercial Real Estate Fund ($30 million EUM)
Client Challenge
Our client, an individual sponsor who had successfully exited five syndicated deals, decided to raise a blind pool fund in order to present her investor network with a diversified offering. She quickly gained soft, verbal commitments from investors totaling $17 million. The fund was poised for a successful launch, but delays in drafting critical documents were starting to jeopardize the timeline. The sponsor spent a lot of time interfacing with prospective investors and left the creation of foundational documents to a reputable law firm. Given the sponsor’s busy schedule and relative inexperience with blind pool funds, she struggled to make key decisions on complex issues like entity structure, waterfall structure, and the fee schedule. As a result, the Private Placement Memorandum (PPM) remained in draft form late into the fundraising window. As the more experienced investors began to ask for additional information and express interest in taking next steps, there was growing concern about the sponsor’s ability to execute on schedule. These delays risked eroding investor confidence and jeopardizing the fundraising process.
Our Action
Our team quickly took charge of the critical document creation and oversight process, working closely with the sponsor to refine the waterfall and fee arrangements based on our industry expertise. We coordinated directly with the fund’s external legal counsel to ensure all key documents, including the Limited Partnership Agreement (LPA) and Private Placement Memorandum (PPM), were accurately drafted and aligned with the sponsor’s expectations. Our team managed the document revision process efficiently, addressing updates and maintaining clear communication with the sponsor to ensure all documents were finalized in time to begin accepting hard commitments in advance of the closing date.
Client Outcome
By efficiently managing the document creation and oversight process, Lexcraft ensured the fund’s foundational documents were finalized on time, thereby allowing the sponsor to progress to the next phase of the fundraising process and begin accepting hard commitments. Additionally, we were able to guide the sponsor on key decisions related to the capital stack and waterfall structure based on market intelligence gathered through work with similar fund clients. Sometimes fundraising is a matter of gaining momentum, and with our support, the sponsor was able to make the jump from formation to successful launch.
Commercial Real Estate Fund ($70 million EUM)
Client Challenge
Our client, a commercial real estate fund managing $70 million in equity, struggled with inconsistent and delayed investor distributions due to limited internal resources. The fund’s operations were overseen by a small team and a part-time bookkeeper, while a third-party property manager handled property-level cash flows. The fund experienced irregular distributions and occasional miscalculations. These issues created significant uncertainty and frustration among the investor base.
Our Action
Our team implemented a centralized investor management portal to streamline key processes. We set up the portal based on the fund’s governing documents to automate distribution calculations, ensuring accurate and efficient allocations. By utilizing the portal, we simplified the handling of capital calls and distributions, allowing our team to execute these tasks promptly while eliminating manual errors. The portal also facilitated investor communication by allowing our team to send updates and reports to coincide with capital events.
Client Result
By implementing an investor portal our team enabled the fund to distribute funds to the investor based on a regular schedule. Automation within the portal ensured accurate calculations to align with the waterfall structure, thereby eliminating manual work and reducing errors. Investors received real-time updates through the portal, improving communication and building trust. This streamlined approach not only enhanced operational efficiency but also significantly improved the investor experience.
Syndication Group ($25 million EUM)
Client Challenge
We were engaged by a commercial real estate syndicator with $25 million in equity under management that was managed by a single general partner and comprised of forty-five limited partners. Prior to our involvement, the general partner was handling all fund administration activities in addition to acquisition sourcing, capital strategy, and property management oversight. The general partner relied on a part-time bookkeeper and had no other staff. As a result, he lacked the bandwidth necessary to issue regular communications to the investor base, and this resulted in communication gaps exceeding eighteen months.
Our Action
We met with the general partner to understand the challenges he was facing in running a fund with assets in multiple markets and without a staff dedicated to investor relations and reporting. We worked with him to design a monthly investor reporting cycle focused on providing investors with property-level updates. As part of this work, we have access to the client’s property management application, and this allows us to gather data from the source system and create investor-friendly data visuals to include in the reporting package.
Additionally, we meet with property management stakeholders on a monthly basis to gather qualitative data on recent, key events that have taken place at each property in recent weeks. Based on these discussions, we provide investors with information pertaining to capital projects, notable occupancy events, and upcoming capital improvements and tenant relations activities.
Client Outcome
Our client has benefited from: (1) Our firm as an ongoing, dedicated resource to ensure that investor reporting adheres to a regular cadence and conforms to an investor-friendly format; (2) Enhanced general partner bandwidth to focus on acquisition sourcing and property management oversight; and (3) A reliable pathway to market upcoming syndicated deals to the existing investor base as part of regular reporting.
Commercial Real Estate Fund ($50 million EUM)
Client Challenge
Our client is a commercial real estate fund with $50 million in equity under management. The fund is managed by a single general partner with a support staff consisting of an Accounting Director and a part-time bookkeeper. A third-party property manager oversees the day-to-day operation of the portfolio and is also responsible for calculating property-level distributions and transferring capital to the fund entity. Due to priorities competing for the property manager’s time, distributions were being made on an irregular, ad hoc basis, and there were instances where incorrect calculations led to further delays in payment.
Our Action
Our team took ownership of several key responsibilities and formalized the fund administration function for our client. First, our team reviewed the foundational documents to understand the waterfall structure in order to ensure the proper allocation of distributions. On an ongoing basis, we oversee fund-level capital call and distribution calculations, and we disseminate investor communications to coincide with capital events.
Client Result
Cash flow is being transferred from the properties to the fund entity on a regular basis, which allows for routine distributions to be made from the fund entity to investors. Our team verifies that calculations are performed in accordance with the waterfall structure and provides a confirmation report to the general partner prior to the initiation of distribution payments. Additionally, we created a template for capital call notices to provide investors with a summary view of committed capital, contributed capital, the upcoming call amount, and an overview of planned capital uses.
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