Portfolio KPIs that predict trouble early: a finance team's watchlist

Trouble in a property portfolio rarely arrives as a single "bad month." It usually shows up first as small, repeatable signals: collections slipping, cash getting trapped, capex accelerating, covenant headroom tightening, or lease risk concentrating in one corner of the portfolio.

The challenge is that portfolios held across multiple SPVs tend to report late, inconsistently, and without shared definitions-so the early warning signs either get missed or get argued away.

This watchlist is built for finance teams who want a monthly, repeatable early-warning system. Each KPI is written in a trust-building format that works well on investor packs and internal dashboards:

• Definition
• Common mistakes
• Best-practice reporting

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How to use this watchlist (so it actually predicts trouble)

Before the KPIs, two rules that make them useful:

1. Report them at the level where risk lives
   That usually means SPV / facility / asset first, then portfolio roll-up.

2. Make them hard to "accidentally improve"
   Use consistent denominators, separate restricted cash, label valuation dates, and track trailing trends (3M/6M), not just month-end snapshots.

If you are operating across many SPVs, the easiest way to make these KPIs consistent is to build a portfolio layer with multi-entity consolidation + standardised chart-of-accounts mappings, so every SPV rolls up the same way and exceptions are drillable.

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1) Unrestricted cash runway

Definition

Unrestricted cash runway (months) =
Unrestricted cash - Average monthly cash burn / net outflows (or forecast net outflows)

A practical variant for property portfolios:

• Split runway into Base operations (run costs) and Committed uses (capex + debt service spikes).

Common mistakes

• Using total cash (including reserves/escrow/tenant deposits) as if it is available.
• Measuring runway off one abnormal month (seasonality, insurance payment, one-off capex).
• Ignoring cash trapped in SPVs (cannot be upstreamed due to covenants or structure).

Best-practice reporting

• Always show cash split: unrestricted vs restricted vs tenant deposits/other.
• Add a "next 90 days" liquidity view: expected inflows/outflows + minimum cash threshold.
• Require commentary when runway drops below a set trigger (e.g., <3 months, or a portfolio-specific buffer).
• Drill down by SPV to spot "cash-rich but trapped" vs "cash-poor and exposed."

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2) Collections rate and arrears aging

Definition

At minimum, track both:

• Collections rate = Cash collected - Cash due (for the period)
• Arrears = Outstanding tenant balances (with aging buckets: 0-30 / 31-60 / 61-90 / 90+)

Common mistakes

• Using billed vs collected inconsistently across assets/managers.
• Reporting only a single arrears number (no aging), which hides deterioration.
• "Fixing" collections by delaying billing or writing credits without explaining it.
• Ignoring concentration (one tenant driving most of the arrears risk).

Best-practice reporting

• Show collections rate + arrears aging side-by-side every month.

• Add a top 10 delinquent tenants list (or top 10 units) with status notes.

• Track arrears as % of monthly rent so it is comparable across assets.

• Flag when:

  • arrears 90+ grows for 2 consecutive months, or
  • collections rate falls below a threshold (set by asset class), or
  • tenant concentration exceeds your risk appetite.

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3) Economic occupancy (not just physical occupancy)

Definition

You will often need at least two occupancy views:

• Physical occupancy = occupied units/area - total lettable units/area
• Economic occupancy = rent earned (or billed) - gross potential rent (at full occupancy)

Economic occupancy is the one that predicts income pain early (rent-free, incentives, under-renting, and vacancy all show up here).

Common mistakes

• Mixing area vs units across assets without labeling (apples vs oranges).
• Letting the denominator drift (total vs available vs excluding offline units) without disclosure.
• Reporting strong physical occupancy while ignoring rent-free periods and concessions.
• Using month-end snapshot occupancy to "explain" monthly revenue.

Best-practice reporting

• Publish physical + economic occupancy together.
• Add an explicit line for offline units/space (refurb, legal, holdback).
• Include average (day-weighted) occupancy when revenue is being discussed.
• Tie occupancy movement to rent movement: vacancy loss, concessions, and leasing pipeline.

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4) NOI margin and controllable OpEx ratio

Definition

• NOI margin = NOI - Revenue
• Controllable OpEx ratio = controllable operating costs - Revenue (or per unit/sqm)

"Controllable" should be clearly defined (e.g., excluding utilities pass-throughs, taxes if uncontrollable, etc.).

Common mistakes

• Changing what is included in NOI month-to-month (capex creeping into OpEx, or vice versa).
• Comparing NOI margin across assets with different recovery models without adjustment.
• Only looking at total OpEx, which hides the driver (utilities vs repairs vs PM fees).

Best-practice reporting

• Lock a portfolio NOI definition and map SPV accounts into it consistently.

• Split OpEx into:

  • controllable vs non-controllable, and/or
  • "people can act on this" vs "pass-through / structural."

• Report costs both as % of revenue and per unit/sqm, with variance drivers highlighted.

• Use materiality thresholds: require notes for any line moving >X% or >-X.

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5) Cash conversion of NOI

Definition

A simple early warning ratio:

Cash conversion = Net operating cash flow - NOI

(You will need to define operating cash flow consistently-usually cash from operations before financing and major capex.)

Common mistakes

• Treating NOI as "cash-like" when working capital and timing effects are large.
• Ignoring one-off timing items (insurance annual payments, service charge true-ups).
• Not separating operational cash issues (collections) from timing issues (payment cadence).

Best-practice reporting

• Show NOI, operating cash flow, and the bridge between them:

  • collections timing
  • payables timing
  • one-offs

• Track a trailing 3-month conversion rate to filter noise.

• Flag persistent under-conversion (e.g., <80% for 2-3 months), then drill down to collections and payables.

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6) Capex committed vs funded

Definition

Track capex in two layers:

• Capex spent (month and YTD)
• Capex committed (approved + contracted but not yet spent)

Then the early warning metric:

Capex funding gap = (committed capex + forecast capex) - (available liquidity + planned funding)

Common mistakes

• Reporting only "spent" capex and missing the pipeline (the real forward risk).
• Mixing refurb/improvement capex with recurring maintenance inconsistently.
• Allowing capex approvals without tying them to liquidity and covenant constraints.

Best-practice reporting

• Publish a monthly capex table by asset:

  • spent MTD/YTD
  • committed
  • remaining budget
  • expected timing

• Require notes on any capex item likely to push cash runway or covenant headroom.

• Separate "safety/mandatory" vs "value-add/discretionary" capex so decisions are clearer in stress periods.

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7) DSCR/ICR headroom

Definition

Use the definition your debt documents require, but track headroom monthly:

• ICR (Interest Cover) = NOI - interest expense
• DSCR (Debt Service Cover) = NOI - (interest + scheduled principal)

And the key management view:

Headroom = actual ratio - covenant minimum

Common mistakes

• Reporting DSCR/ICR at portfolio level while covenants are tested at SPV/facility level.
• Using an NOI definition that does not match the covenant definition (or not disclosing differences).
• Waiting for quarterly testing to realize a monthly decline trend.

Best-practice reporting

• Track DSCR/ICR by facility/SPV, then roll up.

• Show:

  • current month
  • trailing 3-month average
  • covenant minimum
  • headroom

• Add a simple driver view:

  • NOI movement
  • rate movement
  • amortisation changes

• Escalate when headroom declines 2-3 months in a row, even if still compliant.

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8) LTV and valuation-date clarity

Definition

• LTV = total debt - asset value
• Net LTV = (debt - usable cash) - asset value

Common mistakes

• Mixing valuation dates across assets and presenting the result as a single "current" portfolio LTV.
• Using net debt without adjusting for restricted/trapped cash.
• Ignoring that value can move while debt stays constant (and vice versa).

Best-practice reporting

• Always label LTV with the valuation basis and date (e.g., "Sep 2025 external valuation").

• If you track monthly, use either:

  • last official valuation + disclose staleness, or
  • a consistent internal proxy + disclose methodology.

• Present LTV alongside DSCR/ICR: one is collateral risk, the other is cash-flow risk. You need both.

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9) Floating-rate exposure and hedge maturity

Definition

Track:

• % floating after hedging
• Weighted average cost of debt
• Hedge coverage ratio and hedge maturity schedule
• Rate sensitivity (impact of +50bps / +100bps on annual interest cost and DSCR/ICR)

Common mistakes

• Reporting "fixed vs floating" without reflecting swaps/caps (or treating hedges as a footnote).
• Ignoring hedge expiries that create a cliff edge in cost of debt.
• Not translating exposure into cash impact (which is what leadership needs).

Best-practice reporting

• Include a "maturity wall" for hedges alongside debt maturities.
• Publish a simple sensitivity table every month (even if assumptions are high-level).
• Flag any period where hedge expiry + debt maturity stack together.

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10) Lease expiry concentration and renewal risk

Definition

A minimum viable early-warning view:

• % of rent expiring in next 12/24 months
• WAULT (weighted average unexpired lease term) where relevant
• Renewal probability / status (optional but powerful)

Common mistakes

• Reporting a portfolio average that hides a single asset with a major expiry cluster.
• Treating "under offer" as leased (count it separately).
• Not connecting expiry risk to capex/leasing costs required to secure renewals.

Best-practice reporting

• Show an expiry heatmap by asset (rent expiring by quarter).

• Track renewal status: contacted / negotiating / heads / signed.

• Tie lease expiry risk to:

  • expected downtime (void assumptions)
  • leasing incentives
  • capex required to re-let

• Escalate when expiry concentration rises and leasing pipeline stalls.

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The KPI that predicts reporting trouble: close completeness

If you want one "meta KPI" that predicts finance pain:

Definition

• % of SPVs closed by Day X (e.g., Day 5)
• # of entities using estimates
• # of post-close adjustments (and their value)

Common mistakes

• Treating delays as "normal" and letting them accumulate until decisions are always made on stale data.
• Closing everything late because the process reviews too much instead of reviewing exceptions.

Best-practice reporting

• Use a simple close status grid (Green/Amber/Red) and track it month-over-month.
• Run exception-based review (materiality thresholds) to avoid bottlenecks.

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Putting it into a monthly pack: a simple watchlist page

A high-trust monthly "Watchlist" page usually contains:

• Top 10 KPIs (portfolio + worst 3 assets/SPVs)
• RAG status (Red/Amber/Green) with defined triggers
• 3-5 key exceptions with owner + action + due date
• Trend lines (3M/6M) for the most predictive KPIs: collections, cash runway, DSCR headroom, capex committed

The point is not to measure everything. The point is to detect drift early-while you still have choices.