Umar Riaz, executive director at EY, participated in a video interview in conjunction with Nareit’s REITwise: 2023 Law, Accounting & Finance Conference held March 21-23 in Phoenix, Arizona.
Riaz said REITs are facing a “fairly challenging” external operating environment, caused in part by difficulties in finding talent as well as an increasing amount of technology to help with business operations but insufficient internal resources to analyze it. Cost pressures are also increasing, as are investor demands for more analytics, he added.
Meanwhile, Riaz noted that many REITs have “silos of data.” As a result, “it’s becoming quite challenging for REITs to extract the data from those systems to make meaningful decisions,” he said.
Turning to issues of outsourcing, Riaz pointed out that REITs are now looking at the benefits of outsourcing individual tasks versus outsourcing broader functions. “The broader the function you outsource, the more benefit you’ll get out of it,” he said.
In situations where functions can’t be outsourced, REITs are looking at how to use technology instead. However, Riaz stressed that companies should not jump into either outsourcing or technology use without careful consideration. Every REIT, if it hasn’t done so already, needs to think about its desired operating model, and whether outsourcing or technology works better in certain situations.