Why are ancillary revenues important for alternatives?

Ancillary revenues are important for alternatives because they often serve as a differentiator in a competitive real estate market. These additional income streams can enhance the overall profitability of a property beyond just the core rents and provide unique value propositions to tenants and clients. For example, ancillary revenues can come from services like parking fees, amenities, or leasing out additional spaces for events, which can attract more customers or tenants than a property that relies solely on rental income.

By diversifying revenue sources, property owners and managers can improve financial resilience, especially during times when core rental income may fluctuate. This strategy not only maximizes the revenue potential of a property but also helps in establishing a distinctive offering that can cater to the specific needs of tenants or consumers, thereby increasing overall appeal and occupancy rates.