Income Analytics - Intro
Real estate is a heterogeneous asset class. Every property is unique and no two portfolios provide the same returns, but rental income risk is a critical concern for real estate investors regardless of asset location, sector, fund size or strategy.
To manage this risk, investors may have to rely on backward looking data and time-consuming credit risk checks in various regions for potential occupiers, with little ability to scale up across larger portfolios. That is why we have partnered with Income Analytics to deliver a global, integrated solution that measures the likelihood of tenant default in real-time.
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Income Analytics - What is it?
What is INCANS ?
INCANS powered by Income Analytics uses intuitive dashboards, bond-equivalent rating scores and a proprietary global tenant grading system, to provide a common, standardized language across pan-regional teams and investment strategies.
INCANS enables investors to proactively measure and manage income risk.
Key features of INCANS
Real time and future focused analysis
Intuitive dashboards show property level and portfolio lens
Single bond-equivalent rating provides comparability across asset classes
Supports asset selection, due diligence and portfolio sustainability
Income Analytics Video
Understanding Tenant Default Risk with Income Analytics
Watch this 1 min video to better understand what INCANS is and how it can help address the rising concerns around tenant default.
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INCANS in action
How are different investors using INCANS ?
During a Pan-European Core fund build-up it was possible to monitor individual tenant credit risk, but as the fund grew it was increasingly difficult to keep track (such as during lease negotiation) in order to inform proactive asset management. INCANS enables 24/7 monitoring of financial health and default probability of tenants, assets and the fund. The ReWind feature enables access to historical performance and alerts on score changes are available across the team. The Due Diligence application provided long-term probability of failure analysis for prospective assets and tenants.
A European Fund Manager was launching a core fund vehicle and needed to demonstrate enhanced tenant and asset risk monitoring capability that would resonate with their investors. “[INCANS] is a great marketing tool to tell investors how we are monitoring.. income risk…and be able to message where our strengths are.”
A UK Portfolio Manager took significant time to consolidate individual tenant risk reports across a large portfolio. Covid-19 increased the burden of investor and lender income risk forecasting. INCANS provided accurate quantification of income risk, and the ability to forecast long-term probability of tenant failure. “[INCANS] is clear, well presented, a really useful analytics tool. It would take us weeks to produce something half as effective internally.”
Real Estate’s Income Risk in the Wake of COVID-19
COVID-19 has weighed heavily on the financial positions of companies that hold leases for commercial real estate. Property investors can track the covenant quality of their tenants and translate it into a probability of default over the length of the lease.
How Does Income Risk Differ Across Industry Sectors?
The INCANS® Top 200 Averages calculate the % probability of tenant default for the top 200 companies in each of the 83 x SIC 2 industry code types across a particular geographic region. These scores are available to all MSCI INCANS clients.