My CEO has tasked me with quantifying certain esoteric deal making decisions and I'd like to know if anyone else has done the same. Sounds somewhat Bridgewater-esq and I'm sure it's been attempted so opening up the conversation for advice.
Example - In the past we have not made decisions because it might impact our reputation with tenants or the larger CRE community. However, like every decision, we are implicitly saying that if we do X it will decrease our future cash flows by X amount and therefore is not worth it. If you had to fall back on a promise to tenant but in return got paid $10 billion to do so, it's hard to argue that this is not worth the reputational damage.
Many decisions we make it's hard to pinpoint how it will impact our value. The most concrete measures are rents and construction costs & timing. When you start to get to lease up timing and investor interest on sale it starts to get more nebulous. Maybe a catering service offered to tenants will be break even from a pure P&L standpoint, but it will have some positive impact on the value of the project not captured by the P&L. How do we quantify that without reams of data?
I think these types of questions run to the core of the inefficiency of CRE but are something small shops like ours struggle with, especially when we have to deal with LPs that don't understand anything besides impacts to the model.
I'd love to have a conversation with anyone that has thought long and hard about these types of decision making considerations.