As the 2021 (err… 2020?) Olympic Games began in Tokyo last week, we began to wonder: can you imagine if every athlete on a team was responsible for keeping track of their own statistics? For example, in the time trials for the 8-person crew competition, each rower would have a stopwatch to track their boat’s time. Or in a basketball game, each player would keep track of their team’s score independently.
Of course, that would be preposterous. What if multiple athletes recorded different times or scores for their team? So much time would be wasted, pouring through replays and independent accounts of each event in order to reconcile these differences – time that could have been better spent strategizing, or training, or recovering for the team’s next event.
As crazy as it sounds, this is the state of institutional reporting in 2021. And it’s time for a reboot.
Since our inception, Juniper Square has focused on connecting the internal teams within a GP organization around a single, shared repository of partnership data. One source of data powers the GP’s investor portal, investor report generation, capital account tracking, performance calculations, and investor communications. By eliminating coordination costs, GP teams reduce their chance of errors and are free to focus on more strategic tasks.
But in the process of solving these problems, we’ve learned that coordination costs aren’t only an issue within each GP organization. They also persist across the various external stakeholders in an institutional partnership. So, our newest solution is built to unite all partners – not only GPs, but also their LPs and related third parties like consultants, custodian banks, and industry groups – around a shared digital record of investment data, seamlessly accessible for all parties while controlled and managed by the GP.
The state of institutional reporting today
When we surveyed institutional LPs, we found that only one in seven says they receive “good data in a timely manner.” One in seven!
At the most basic level, the challenge is that every institutional GP and LP has implemented their own investment database independently. Some of these are homegrown, and some are built using third party software systems. But none of them speak to each other, and attempts to sync them are typically through inefficient, error-prone PDF and Excel data transmission.
Originally, all data was transmitted via PDF. This is easy enough for GPs – who can publish one report to serve all LPs – but doesn’t work for LPs who invest with many different GPs, all of whom have developed their own unique PDF formats and data definitions. LPs are forced to burn team time (or hire a third party) to parse these PDFs and pull out relevant data points. However, because different GPs report on different data points, it doesn’t matter how efficiently or accurately you can extract information from each PDF report – you’ll never have a consistent, apples-to-apples dataset with which to work.
As a result, an ever-increasing number of LPs and related third parties turn to Excel templates to facilitate data collection. Theoretically, this approach solves for data consistency – i.e., a given LP or consultant can expect to receive the same file from all GPs – but this has created a mountain of new problems. Previously, a GP produced a single PDF report for all LPs. Now, GPs are asked to complete tens, hundreds, or in some cases thousands of reporting templates each quarter, most of which were developed independently of one another with unique formats and data definitions.
It’s starting to make sense that less than 15% of LPs receive good data in a timely manner…
How this plays out in practice
Imagine that a fund with 100 LPs acquires an apartment building in San Francisco. That update now needs to traverse this complex reporting web to make its way into the database of each of those 100 LPs. The GP will publish the update in their next quarterly PDF report, and also spend hours filling out Excel templates. According to one LP template, this is a multifamily property in the state of California, and according to another it’s an apartment property in the San Francisco-Oakland-Fremont metropolitan area, while a third requires it to be classified as a residential property in the Western region of the United States.
Now imagine that after the update has traversed this complex reporting web, one of the 100 LPs in the fund finds an error – perhaps the cap rate at acquisition was calculated incorrectly. Think about the series of events required for every stakeholder in the partnership to have a clean record of this investment…
First, that LP checks with the GP to confirm it’s an error. Then the LP makes the fix in their database, and reaches out to their consultant and their custodian bank, each of whom makes the fix in their respective database. Then the GP makes the fix in their own database. Then the GP needs to go back, update every other LP’s custom template, and circulate the new versions. Lastly, the GP might issue a re-stated quarterly PDF report.
What are the odds that update successfully makes its way into the database of every LP and related third party? How many hours have been wasted? Could those hours have been better spent creating value for the partnership by searching for new deals, or negotiating leases, or planning renovations?
At Juniper Square, we can offer a better way.
Reimagining the future of reporting
We built Institutional Reporting to connect GPs and LPs around a shared, reliable dataset that only requires GPs to maintain one record of a given property or a given fund. That shared data is managed and controlled by the GP, with no need to transmit data to LPs in separate Excel or PDF formats. Instead, all LPs in the partnership can easily access their shared data in Juniper Square, including exporting that data for use in other systems.
Even the largest LPs with custom and complex reporting requirements are able to gather and manage their real estate data from GPs using Juniper Square. With direct access to custom asset and performance data from all their GPs in one place, LPs have more accurate, timely, and standardized information across portfolios, making it easier for them to evaluate performance and make important investment decisions.
Circling back to the example we looked at earlier, when a fund acquires a property, the GP can add it to Juniper Square one time and immediately grant access to all LPs and approved third parties. If one of the LPs in the fund notices an error – for example, the cap rate at acquisition was calculated incorrectly – they can alert the GP, the GP can make that update in Juniper Square, and all other LPs in the fund immediately have access to the updated, accurate information.
A world-class network
The best part of all? The Juniper Square reporting network is already operating at scale. We’ve been in beta for over a year with an incredible group of early partners – GPs, LPs, and consultants alike – and have been listening, learning, iterating, and growing quickly.
Hundreds of GPs including Beacon Capital Partners, Rockpoint Group, Waterton and 59 of the PERE top 100 already use Juniper Square Institutional Reporting, which allows some of the world’s largest LPs including Bouwinvest, Ivanhoe Cambridge, Oregon State Treasury and UPS Pension Investments to access information on their real estate holdings unavailable elsewhere.
When a new LP creates an account with Juniper Square, they’ll typically find that more than 75% of their fund investments are already being reported to other LPs in the network. In these cases, the GP only needs to add unique position-level data (e.g. commitments, contributions, distributions, and account balances) to complement the common data that’s already modeled (e.g. fund and property details) and deliver a complete set of reporting data to the LP.
Reporting doesn’t need to be difficult. If you’re interested in joining our reporting network, please get in touch to learn more!