Our FAQs section will answer to the most frequent questions, for e.g., “What value does RQR bring in comparison to the other rating systems?” or “With which frequency are ratings updated?”.
The Benefits section highights the gains and advantages for the market players, investors, agents, architects, experts, public sector representatives and so on.
Rating: a company delivers a type AA notation, or rating, of buildings owned by a client. The owner will have access to all rating details and will be able to control with whom this rating should be shared.
Value allows our contributors to access a greater range of investors and ensure lower financing costs: this rating will help when communicating about cash flow robustness, and reduce information asymmetry and hence financing and insurance costs for our clients.
Once rating is complete for a portfolio of buildings, this rating can be compared to a certain reference (‘benchmark’). This comparison will allow the investor or player to understand how their exposition differs from the benchmark, and what can be improved about it.
This analysis highlights not only the inherent physical quality of an asset, but also the quality of cash flows, as well as retention modalities. Cash flow quality corresponds to revenue predictability, based, amongst others, on typical length of rent and financial soundness of the lodgers.
Value makes it possible to achieve a higher and more predictable performance thanks to better management. This management is improved with the knowledge of the underlying forces and the ways to lessen the weaknesses of a portfolio, a better risk pricing, the identification of profitable construction work, the prevention of obsolescence, and allocation management.
When rating an asset, numerous data are collected: physical characteristics, operational and financial characteristics. This data are then aggregated following a confidentiality protocol defined with great care. These indicators will later be accessible non only to the owners but also any other professional, who has paid a subscription.
3 main indicator types:
» Quality indicators: they aggregate quality variables by geographic zone and typology. For example: what is the average or distribution of global quality of assets in a given sub-market.
» Indicators aggregating quality and operational indicators: vacancy, or commitment duration by quality level.
» Indicators aggregating quality and financial indicators: rent or actualization rates by quality.
Value: it will allow to
» establish new investment strategies, better adapted to a certain risk profile – something that isn’t today possible with simplistic segmentation such as administrative segmentation or building typology.
» An asset selection better defined and quicker to put in place with the better knowledge of the assets positioning, before an acquisition.
– simulations related to the impact of an acquisition / arbitrage on quality of a portfolio
– positioning analyses of a building compared to competition before an acquisition
– impact simulation of construction work done on a portfolio
– assessment of the value created by planned construction work
Yes. We offer two levels of data protection:
– First of all at contractual level
– Unless an owner instructs us to do otherwise, no specific information is ever shared with a third party. Data are stored on separate servers, for each client, hosted at a tier 3+ Data Center of the l’Uptime Institute.
Real estate, a real asset, has two characteristics that makes it different from other financial assets:
1) the funds invested are large (from a few million to sometimes hundreds of millions)
2) these funds are invested long term (a few years at least) since real estate isn’t a true liquidity, and transaction costs are high. Thus, it is all the more important to take the right decisions when investing in real estate. This decision making needs to be rational and based on two factors: price and quality.
In case an investor requests a rating, they can use it with two aims in mind:
1) Financial communication: a greater transparency of quality of the asset for a reduced cost of financing and access to a larger choice of investors,
2) Managament: a better knowledge of the structure and exposition to financial risks, the identification of what can be improved, a better approach to acquisitions, the measure of building obsolescence, and allow a more rational approach to pricing and value creation measure.
When looking for a new place, our rating will make it easier to identify the actual quality of a building, and hence to optimise quality for a certain level of budget.
Quality is a determining factor of monetary value. On top of measuring quality, RQR gives access to experts highlighting the relations between market quality and assessment metrics (actualization, rent, etc.).
A market for which quality is unknown (or little known) is defined as a ‘lemon’ market. That is to say, a market for which players will assume that quality is average and therefore high prices are difficult to justify.
This rating will allow a better communication between agents and lodgers, and will help to explain the differences of rent from one building to the next.
Our rating allow investors to assess their assets in comparison to competition, and highlight what can be improved. These diagnostics will trigger a need for the technical department.
True quality knowledge allow efficient and rational approach in the identification of spreads.
Moreover, identifying obsolescence will allow a better economic approach towards the evolution of value of a collateral, compared to an approach often unrealistic (because only based on an accounting view of value).
Our rating allows to establish a concrete and reliable diagnostic for real estate assets.
It also allows to highlight public services efficiency, thanks to the measure of how much value is created with the construction of new infrastructures.
According to ISO, quality is the ability of a product or service to answer to specific needs. Adding to this definition, we can say that the more the product or service is able to meet the expectations and needs of a large part of the involved parties, the more its inner quality is high.
Regarding the real estate market, these parties are represented by different groups, likely to contribute more or less directly to the measure of the asset. They are, the investirs, lodgers, owners, but also experts, agents, property / facility managers, assessors, architects, bankers, and public services.
Quality is composed of two fundamental properties.
The first property is the inherent, or intrinsic quality of a product, that is to say, it is a permanent attribute to the product. It can be both based on tangibles and intangibles attributes. When it comes to a building, the rating methodology consists in identifying these attributes, both inherent and determining for quality.
The second property acknowledges the fact that by nature, quality is perception. Thus, by definition, according to every economic factor taken individually, quality measure is essentially subjective. However, when it is applied to the market, it becomes objective: intersubjectivity gives birth to objectivity. It is precisely this property that RQR measures.
RQR rating actually enriches the existing certifications.
1. First, RQR rating isn’t a certification: certifications award exemplary and the best assets, whereas RQR was created to give ratings to all assets to help investors.
2. Moreover, those certifications are normative in nature: they are defined on the basis of scientific facts and/or values that ought to be followed for the environment or the well being of employees.
In contrast, RQR is pragmatic since it is based on perception of the different market players. This rating naturally incorporates these fundamental characteristics used by these certifications but goes well beyond – beyond good intentions and marketing tactics – and highlights the practical importance of these characteristics, for the market players, when taking their decisions.
3. Finally, these certifications are specialist in nature, since they are only focusing on one type of issue: environment, well being, digital quality etc. This rating is complete and holistic since it measures the quality in all its dimensions and from a point of view of the involved parties. Thus RQR allows to make sense of the diversity of those certifications.
No. RQR is able to extract information from native (unprocessed) sources: the investor simply sends these documents available about the building (maps, diagnostics, reports and assessments etc.); RQR is then able to extract the necessary information.
RQR gives access to its clients, to a secured data storage facility in which the client can upload their source documents: PDF, Autocad, etc.