Technology Helps Investors Manage Risk, Software Makers Say

The fall of former financial giants American International Group and Lehman Brothers, fire sale acquisitions of Merrill Lynch and Washington Mutual, the collapse of multiple banks and industry-wide cutbacks in the financial sector have undoubtedly left commercial real estate owners and investors wondering about the potential impact on their portfolios. But technology–in the form of automated systems to track and analyze RE investments–may provide some peace of mind for concerned owners and investors, several software makers suggest.

In some cases, the affect of the shakeout in the financial sector on commercial property was all too obvious: Bankrupt Lehman leased more than one million sf at Canary Wharf in London–and its rent was secured by AIG, which itself came close to collapse before a US government bailout. Canary Wharf Group’s majority shareholder, Songbird Estates PLC, says AIG is supposed to pay up to four years of rent if Lehman defaults. But even if that occurs, the total will fall far short of the projected income from a lease that runs through 2033.

Songbird is still grappling with the long term implications. And so are countless other real estate owners and investors, who may have had varying levels of exposure to one or more of the crippled firms, industry experts concur. It’s a challenging task, says Eric Forman, CEO of Needham, MA-based Resolve Technology.