Simplifying Banking for Real Estate Companies

By Goldman Sachs Transaction Banking (TxB) Staff

Real estate companies face many payment and cash management complexities as they manage multiple properties, suppliers, and payment methods.

Consider a major lodging company that manages numerous hotels and resorts worldwide, with most being owned by outside investors. The company establishes property specific bank accounts on behalf of the owner to pay housekeepers, landscapers, maintenance staff, and property taxes – including through different payment methods and in various currencies. As a result, the treasury operations team invests significant resources managing an ever-increasing number of bank accounts, reconciling payments to invoices, and completing monthly reporting requirements across multiple banks.

Similarly, a major shopping mall REIT with locations across the United States and beyond deals with the complexity that comes with numerous tenants making monthly lease and associated expense payments. This results in the receivables team spending countless hours each month tying each incoming payment to its specific lease identifier to ensure that all tenants are up to date on their obligations.

Fortunately, banking tools developed by Goldman Sachs Transaction Banking (TxB) can help streamline and modernize payments and deposits for lodging companies, REITs, and other real estate businesses.

Virtual Accounts

Goldman Sachs Virtual Integrated Accounts (VIA)™ help our clients streamline payments and organize accounts. The benefits are significant:

• Streamlined virtual account creation and closure through TxB’s user interface or APIs make it easy to open a unique virtual account for every entity – payer, payee, or property.
• Clearing recognizable virtual sub-account numbers make reconciliation more efficient and less error-prone, while providing the same experience as physical accounts.
• Real-time integration with our clients’ existing treasury, property management, and ERP systems reduce the need to access banking portals and ensure up-to-date payment status and reporting at clients’ fingertips.

How does it work? With the ability to generate a VIA for each mall REIT lease – such as a new anchor tenant for a strip mall – monthly payments can all be routed directly to that virtual account – regardless of payment type. Real-time reporting back to the client’s property management system results in closing out that outstanding receivable without any manual intervention by the operations team. This is a simpler and more robust solution compared with having property level physical accounts that often require manually parsing through remittance details to match incoming payments to specific leases.

The ability to nest these lease VIAs under property level VIAs, which can further be nested under region/country/ownership level physical accounts or VIAs, provides the ability to manage payment data to easily segment out activity, monitor performance, and create sophisticated reporting.

VIAs can also streamline outbound payments. If the lodging company needs to pay a landscaper that plants flowerbeds at multiple properties, the vendor payment can come directly from each property’s VIA or a sub-account associated specifically with that vendor. Reconciliation that might have involved checking the billing system, sending emails, or making phone calls is now automated, easing the burden of managing properties.

TxB’s VIAs are scalable, cost-efficient, and easy to create through an API or our online user interface.

Tighter Integration

In the banking industry, VIAs are often built as subledgers on top of physical accounts and lack the ability to route inbound or outbound payments. Goldman Sachs Virtual Integrated Accounts (VIA)™ have their own virtual sub-account numbers that can send and receive payments.

Real estate companies can minimize cost and friction in their cash management processes by creating unique VIAs for each lease, vendor, or property, enabling granular bank information reporting.

The result for real estate clients is more efficient and accurate processes – and a more seamless banking experience.