Beth Zayicek, Chief Operating Officer, Citymark Capital.

The question of how to boost efficiency to enhance margins and scale in private markets with demand was asked of several Chief Operating Officers and other investment operations professionals in a recent Clear Path Analysis report.

The report, sponsored in conjunction with SS&C Advent, was based on an in-person roundtable in New York attended by representatives of Angel Oak Capital, Adams Street Partners, SKK, Prosperity Asset Management, and PSP Investments.

Also among these was Beth Zayicek, Chief Operating Officer, Citymark Capital.

The conversation covered how private credit cannot mirror what works for private equity in order to be a success.

The last decade has focused more on private credit, the report said. What the industry has had to learn is that it requires a different set of tools, systems, and decision-making frameworks.

The solution comes down to timing, flexibility, and aligning your systems with your business strategy. We learned that it’s nearly impossible to retrofit our existing setup to accommodate private credit.

The dynamics of that space are completely different, and trying to manage everything under one system doesn’t work effectively.

"When it comes to systems and infrastructure, even within the real estate space, you need highly specialised tools."

So, considering this when it comes to best of breed approach – does it improve operational efficiency, and is the individual system’s return-on-investment superior to all-in-one?

“We’re based in the US and invest across both equity and credit. In some ways, we operate within a single asset class, real estate, but the differences between real estate equity and real estate credit are significant. When it comes to systems and infrastructure, even within the real estate space, you need highly specialised tools."

That’s why she said her own company believes in a best-of-breed approach: using systems that are tailored to the specific needs of each strategy. “One aspect of real estate is the level of detail investors expect,” she said. “They want to know exactly what’s happening with the underlying assets, which means tracking over 100 different data points for each physical asset, and that requirement doesn’t go away when it comes to credit.”

This means that you may get fewer questions about collateral structure, but the demand for transparency remains high. “To meet those expectations, we rely on flexible, purpose-built systems. It’s the only way to properly track everything and maintain operational efficiency.”

Otherwise, you could be stuck relying on Excel spreadsheets or analysts sifting through physical documents, which simply doesn’t scale. “You need to be able to access accurate, detailed information at any time,” she said.

The real estate market

The report covers the views of those involved and their thoughts on the real estate sector, specifically as a leading area of private markets.

“The real estate landscape has expanded beyond the multi-family, office, and industrial sectors to include niche subsectors, yet existing systems weren’t designed with these in mind."

The post-pandemic world of real estate has changed markedly, and considerations around trends must be taken into account to counter those rapid social shifts.

“The real estate landscape has expanded beyond the traditional multi-family, office, and industrial sectors to include many niche subsectors, yet existing systems weren’t designed with these in mind,” said Zayicek. “Future-proofing a business is difficult when the future itself is uncertain.”

Zayicek said that one key aspect of this is that technology alone cannot solve problems if consistent, repeatable processes are not in place.

“Many legacy, in-house systems were built around the habits of individual users, which means transferring to new systems often involves migrating 'band-aids' that patch inefficient or inconsistent processes,” she said.

Therefore, it is critical to ensure that processes are properly designed and standardised before implementing or customising technology, she said.

You can read Zayicek’s thoughts and the report in full here.

 

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