Connect with us

Investing

REIT Trends: Innovative Data Strategies for Better Investments

Published

on

REIT Trends: Innovative Data Strategies for Better Investments 3

By Josh Miramant, CEO and founder of Blue Orange Digital

Data transformation is this decade’s differentiator for REITs (Real Estate Investment Trusts). Predictive acquisition analytics, occupancy optimization, and rent retention are the dream, but, before that, you need to unify the disparate spreadsheets, one-off databases, and 3rd party apps that cut across the Real estate industry. Building the infrastructure to unify data enables real estate investment funds to find better investments and make better decisions.

Introduction

In the past decade, data has been at the center of the digital revolution. It has enabled new applications, created new business opportunities, and has enabled innovation across the entire CRE sector. Leading organizations engage in data-driven problem solving on a daily basis. Data has become the compass that is guiding both operational and investment decisions.

However, in 2020, data is ubiquitous. Simply having access to data is not enough for an actual competitive advantage. Making sense of the vast amounts of data available today requires computing infrastructures, flexible processing architectures, and advanced algorithms. Without these, simply having data is useless. Moreover, data could turn into an expense if the appropriate tools are not used for handling it.

Below are some technologies and data strategies for investors to leverage while capitalizing on the opportunity of distressed commercial assets. The foundation of any successful predictive analytics model is a unified data storage solution and machine learning(ML) automation.

How to take advantage of third party data

Source: big2smart

Source: big2smart

Unified Data

Traditional data storage tools are built for department-specific data, aggregated in isolated warehouses. Such storage solutions have worked well in the past but only offer access to a limited section of data. To exemplify, the marketing warehouse may contain social media metrics, while the sales warehouse contains prospect company assessments. The lack of overlap of this information prohibits a better understanding of both sets of data.

Modern data storage tools (such as data lakes) work on the idea of unified data. They make it possible to store a large variety of data sources in the same location. This makes it easy to integrate both internal and external data sources and to use ALL data available for analytics.

Storage choices should no longer limit the ability to manage and make sense of your data.

Unified Data Benefits at a Glance:

  • Easier data access

Users with different access levels can access both structured and unstructured data across the entire organization

  • Faster data preparation

Adequate storage solutions translate to reduced data wrangling and preparation efforts

  • Enhanced agility

Query tools enable datasets to be assembled “on the fly”, resulting in datasets that can be repurposed

  • Streamlined data exploration and analysis

Larger, broader data sets are easily available for a variety of use cases: from advanced analytics models to basic business reports

Benefits of Unified Data in Commercial Real Estate

Unstructured data turns into more in-depth customer and market understanding

Unified data offers REITs access to a 360-degree market view, by providing access to a variety of real estate features. Rental values, sociodemographic data, and even geographic features of a location can be analyzed simultaneously. Traffic, area walkability, social media reviews of neighborhood amenities, and even IoT sensor data can also be integrated on top. All these different data sources offer the possibility to gain insights at a property-level. Such granular insights can only be gained from unstructured data and enable REITs to minimize risks and deploy capital in the right places.

ML speeds up processes to improve internal decision making

Unified data makes it possible for Machine Learning algorithms to tackle a variety of real-estate tasks: from property management applications to tedious back-office tasks. Remote property monitoring solutions and live tracking of public and private spaces are some common examples of ML-enabled applications. At the same time, automated

Josh Miramant

property valuation models are nowadays ubiquitous and configured to integrate a variety of data sources. Once in place, such ML-tools can either work autonomously or give suggestions to human decision-makers. Such man-algorithm cooperation ensures increased performance, minimized operational costs, and more efficient, streamlined internal processes.

Predictive analytics for increased ROI

Unified data enables predictive analytics on real-time data and thus enables REITs to identify investment opportunities ahead of their competition. Predictive technologies fill in the gaps where traditional BI tools and descriptive models fail to deliver. Instead of answering questions like “what is happening now?”, predictive analytics helps figure out “what could happen in the future?”. Quantitative evaluations with regards to investment opportunities, risk assessment, and market volatility give REITs a solid base for tackling operational efficiency. When data insights are replacing subjective interpretations, it is ensured that capital is spent in the appropriate places and unnecessary costs are cut to a minimum.

The IDC reports that investments in the new applications can pay for themselves in 9 months and achieve an ROI of 415% over 5 years.

REIT Trends: Innovative Data Strategies for Better Investments 4

Case Study – Increased Accuracy of Property Valuation Modeling

Research conducted in 2017 tackles “the effects of walkability on property values and investment returns.”. In order to model walkability and to assess its impact on real estate property values, they took into consideration a variety of features characterizing local activity.

“Several different physical and social attributes of the area around a property can affect walkability. As such, it is a multi-dimensional construct composed of different factors which together comprise a single theoretical concept. Contributing attributes include urban density, land use mixing, street connectivity (i.e. the directness of links and the density of connections), traffic volume, distance to destinations, sidewalk width and continuity, city block size, topographic slope, perceived safety, and aesthetics.”

That is an impressive list of features and we can assure you: such attributes would rarely be found in traditional, historical sales datasets. These are features that are known as “alternative” or “orthogonal.”

They originate in third-party data sources and were originally perceived to have little connection to the problem being tackled. However, through machine learning algorithms they were found to be quite influential when taken into consideration for investment properties. While humans may not be able to see all the factors impacting an outcome variable (e.g. property value), algorithms do a great job identifying complex patterns. For this reason, integrating “seemingly unrelated” third-party data for analytics has proven to be the best way to learn from data.

Source: McKinsey & Company

Source: McKinsey & Company

Alternative data completes the image that the traditional data sets are painting. It brings in a fresh perspective, with the possibility of discovering unexpected patterns. Most importantly, orthogonal data is usually data generated by humans and their day-to-day activity. Since this is much closer to how humans make decisions, it only makes sense to look at this data in order to discover buying patterns and real estate trends.

The benefits of alternative data can be seen well beyond this example. With a variety of data sources that are emitting data, state-of-the-art CRE applications have used anything from social media feeds, to geolocation information, and IoT sensor data.

Source: McKinsey & Company

Source: McKinsey & Company

Conclusion

A unified data infrastructure plays a critical role in data transformation strategies. Not only does it bring agility and flexibility to existing data architectures, but also opens up new opportunities for data access and management.

Unified data tools are an investment in the future. As real estate data is becoming more and more diverse, investment decisions will also become more complex. REITs that invest in data processing expertise and modern tools will see their benefits for years to come.

Blue Orange Digital works closely with organizations to identify, plan, and implement data transformation strategies. Our team of Ph.D. data scientists anad engineers has vast experience setting up data-centric architectures and implementing modern analytics solutions.

Blue Orange Digital makes it possible to use the right tools and the right people for your data transformation strategy. REITs now have a chance to not let data turn into waste and actually transform it into a useful asset, that drives strategies and optimizes their investment decisions.

Investing

Are clients truly getting value from their BR solution?

Published

on

Are clients truly getting value from their BR solution? 5

By Matt Dickens, Senior Business Development Director at Ingenious

Financial planners and wealth managers strive to deliver on the needs of their clients by always providing the most suitable and effective advice. But as with any service, this advice should also be delivered at the best possible value for the investor. Value can be simplistically defined as the service that delivers the most benefit, balanced against the financial cost, but in the estate planning space, how do you assess what good value is?

1. Total fees and charges

Product fees are guaranteed to negatively impact returns, so it is important to minimise their impact when looking to gain the best value from the investment. Some managers report little or no fees paid by the investor to the manager, but instead charge the company or investment service itself. While this might initially be seen as better value for the investor, it is not as simple as that. Investors in unlisted BR services become a shareholder of the portfolio companies, so the reality is that any fees paid by the companies are effectively being paid by the shareholder (or investor). Therefore, both investor fees and company fees will both negatively impact the final return and must be considered together.

Analysis of what a manager is paid by the investor and by the company over a significant period will enable an adviser to conclude if the manager is offering good value, or if a disproportionate amount of fees is going to the manager at the expense of their investors.

2. Real investment returns

Another key component of assessing value is what the investment actually delivers. For BR solutions, investors’ main objective is commonly to pass on the maximum sum possible to their beneficiaries upon death. This may lead to a conclusion that delivering Inheritance Tax relief at the lowest possible cost is the primary driver of value. However, especially for clients with longer time horizons, the one-dimensional goal of avoiding a potential 40% Inheritance Tax bill can easily over-shadow the equally important goal of aiming to steadily grow the investment, preventing erosion by inflation, drawdowns and investment fees. Unlike some IHT-focused solutions, such as trusts or gifting, investors in BR services do not have to accept zero growth of their wealth from the point of investment.  Instead, investors can continue to earn returns, either taking an income stream or increasing the final sum to be passed onto their beneficiaries, precisely in line with their original objective.

While most BR managers predict their ongoing returns at a certain level, those targets are not guaranteed and historic performance varies widely.

3. The relationship between fees and risk

Given that the majority of managers in the BR space state their performance targets net of fees, to produce positive growth and achieve their target return, those managers must first earn back any fees they are taking. Let’s take the below scenario to illustrate this point.

 Are clients truly getting value from their BR solution? 6Manager 1

Annual performance target, net of fees: 3%

Annual fees: 3%

Gross performance target: 6%

 

Are clients truly getting value from their BR solution? 7Manager 2

Annual performance target, net of fees: 4%

Annual fees: 1%

Gross performance target: 5%

Initially, it might appear that Manager 2 must be taking more risk to target a higher net return of 4% than Manager 1, who is targeting 3%. However, Manager 1 has to deliver an additional 2% of gross return than Manager 2, to make up for charging higher fees. Higher fees not only impact returns and value, but they can also mean greater risk.

Market comparison

In the Tax Efficient Review’s most recent analysis of Unlisted BR Services1, they released data that ranks services in the market in terms of both investor returns and total fees. IEP Private Real Estate achieved the top rank for returns delivered, with the second lowest total fees in the market, demonstrating that it represents attractive value for investors in comparison to other services.

Continue Reading

Investing

Reuters Events Launch Global Investment Summit Online Edition Uniting Institutional Investors, Asset Owners & Financial Institutions

Published

on

Reuters Events – today announced the agenda for their Global Investment Summit (Dec 3rd -4th). The 2-day strategic summit has been reimagined in the era of social distancing and will be broadcast free of charge to the public.

This Summit, with a diverse range of international voices and anchored by Reuters News-led sessions, is the only place for institutional investors, asset owners and financial institutions to come to terms with the events of 2020.

Click for more information and for complimentary registration to the online edition

The Energy Transition team report an industry leading speaker faculty for 2020, including:

  • Eileen Murray, Chair, Finra
  • Philip Lane, Chief Economist, European Central Bank
  • Gregory Davis, Chief Investment Officer, Vanguard
  • Hanneke Smits, CEO, BNY Mellon Investment Management
  • Pascal Blanque, Chief Investment Officer, Amundi
  • Desiree Fixler, Group Chief Sustainability Officer, DWS
  • Joe Lubin, CEO, Consensys
  • Bahren Shaari, CEO, Bank of Singapore
  • Mark Machin, CEO, Canada Pension Plan Investment Board

The agenda released by Reuters Events Investment is both ambitious and comprehensive, and will cover four key themes: Market Outlook, Asset Management Strategies, Industry Deep-Dives and the Future of Investment.

View the full agenda here

Continue Reading

Investing

Halliburton & Baker Hughes CEO’s join Reuters Events: Energy Transition 2020

Published

on

Reuters Events – today announced that CEO’s of two of the world’s leading energy service companies, Halliburton and Baker Hughes, will join the speaker faculties for their flagship Energy Transition Summit.

The event will explore the creation of the future energy ecosystem and offer companies, from across the asset spectrum, a definitive guide to their net-zero strategies. The alignment of the two biggest O&G global service companies, Halliburton and Baker Hughes, represents a significant step in the transition to low-carbon energy

More information on the Europe and North America editions can be found below. Registration for the LIVE stream is free.

Alongside their CEO speaker representation, Halliburton join as Platinum sponsors of the North American edition. Baker Hughes join as gold sponsors for the European edition of the flagship energy transition program.

The Energy Transition team report an industry leading speaker faculty for 2020, including:

  • Lorenzo Simonelli, Chairman & CEO, Baker Hughes
  • Jeff Miller, CEO & President, Jeff Miller
  • Tristan Grimbert, CEO, EDF Renewables
  • John Pettigrew, Chief Executive, National Grid
  • Pratima Rangarajan, CEO, OGCI Climate Investments
  • Alex Schneiter, CEO & President, Lundin Energy
  • Gretchen Watkins, President, Shell Oil Company
  • Calvin Butler Jr., CEO, Exelon Utilities
  • Francis Fannon, Assistant Secretary ERB, S. Department of State
  • David Lawler, Chairman & President, bp America
  • Andreas Schierenbeck, CEO, Uniper

More information on the Europe and North America editions can be found below. Registration for the LIVE stream is free.

Governance & Cooperation – Does the energy transition face a ‘governance deficit’? To understand how the energy transition will develop over the next decade, it is crucial to understand the driving governing forces behind it. Will the Green Deal provide the first domino, how can we ensure progress in the shadow of Aberdeen and ensure that we translate targets into action?

Financing Energy Transition – We must address the elephant in the room; who is going to pay for it all? An understanding of where the funds are likely to come from is key to staking claim to the infrastructural projects that will redefine the modern world in the 21st century.

New Energy Infrastructure – Low-carbon energy supply and consumption will need a radical overhaul of infrastructure. As well as revamping the old, we’ll need entirely new assets and new systems of energy delivery. It’s an unprecedented opportunity with estimated spending at $70 trillion over the next decade. Knowing which technologies are ready to be scaled first is the key to understanding opportunity

Business Model Innovation – Who will provide leadership through the age of transition and how do we want our future energy system to look? Speed and timing will be crucial if you are to stay on the right side of the transition. Join us in setting business led, evidence based, targets as industry drives towards net-zero

More information on the Europe and North America editions can be found below. Registration for the LIVE stream is free.

At Reuters Events, we’re committed to tackling the Energy Transition head on; to shed light on the defining issue of our time and help energy companies meet a uniquely difficult challenge. That is, to be both an energy company of today, and the energy companies of tomorrow. In a period that will be defined by uncertainty we can, together, lighten the way forward.” – Owen Rolt, Head of Energy Transition, Reuters Events

Contact

Owen Rolt

Head of Energy Transition

Reuters Events

UK: +44 (0) 207 375 7596

E: [email protected]

Continue Reading
Editorial & Advertiser disclosureOur website provides you with information, news, press releases, Opinion and advertorials on various financial products and services. This is not to be considered as financial advice and should be considered only for information purposes. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third party websites, affiliate sales networks, and may link to our advertising partners websites. Though we are tied up with various advertising and affiliate networks, this does not affect our analysis or opinion. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you, or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish sponsored articles or links, you may consider all articles or links hosted on our site as a partner endorsed link.

Call For Entries

Global Banking and Finance Review Awards Nominations 2020
2020 Global Banking & Finance Awards now open. Click Here

Latest Articles

Entersekt provides clarity on Secure Remote Commerce authentication techniques for financial institutions 8 Entersekt provides clarity on Secure Remote Commerce authentication techniques for financial institutions 9
Technology16 hours ago

Entersekt provides clarity on Secure Remote Commerce authentication techniques for financial institutions

New whitepaper from Mercator available: Revisiting Authentication in the Age of SRC and EMV 3-D Secure Is it time for...

Thinking Long-Term When Your Shareholders Won’t Let You 11 Thinking Long-Term When Your Shareholders Won’t Let You 12
Business17 hours ago

Thinking Long-Term When Your Shareholders Won’t Let You

By MaryLee Sachs, US CEO, Brandpie In a recent study of nearly 700 CEOs across the US and Europe, my...

Are clients truly getting value from their BR solution? 13 Are clients truly getting value from their BR solution? 14
Investing17 hours ago

Are clients truly getting value from their BR solution?

By Matt Dickens, Senior Business Development Director at Ingenious Financial planners and wealth managers strive to deliver on the needs...

New TransUnion Study Finds Smooth Digital Transactions “Essential to Business Survival” During and After Pandemic 17 New TransUnion Study Finds Smooth Digital Transactions “Essential to Business Survival” During and After Pandemic 18
Business21 hours ago

New TransUnion Study Finds Smooth Digital Transactions “Essential to Business Survival” During and After Pandemic

Economist Intelligence Unit report for TransUnion highlights the crucial role emerging technologies will play in balancing fraud prevention and customer...

How technology has made us communicate better in crisis 19 How technology has made us communicate better in crisis 20
Business23 hours ago

How technology has made us communicate better in crisis

By Pete Hanlon, CTO of Moneypenny COVID-19 has taught us a lot. We have embraced technology, some might say, survived...

Futureproofing Your Credit Management Now 21 Futureproofing Your Credit Management Now 22
Finance23 hours ago

Futureproofing Your Credit Management Now

By Marieke Saeij, CEO, Onguard The pandemic has forced a shift in day-to-day operations for the majority of businesses. In...

Will covid-19 end the dominance of the big four? 23 Will covid-19 end the dominance of the big four? 24
Top Stories1 day ago

Will covid-19 end the dominance of the big four?

By Campbell Shaw, Head of Bank Partnerships, Cardlytics Across the country, we are readjusting to refreshed restrictions on our daily...

Why cybercriminals have ‘Gone Vishing’ during the COVID-19 Pandemic 25 Why cybercriminals have ‘Gone Vishing’ during the COVID-19 Pandemic 26
Business2 days ago

Why cybercriminals have ‘Gone Vishing’ during the COVID-19 Pandemic

More than 215,000 vishing attempts in the last year alone As new coronavirus restrictions look set to confine much of...

Risk Mitigation vs. Risk Avoidance: Why FIs Need to Maintain Risk Appetite and Not Place All Bets on De-Risking 27 Risk Mitigation vs. Risk Avoidance: Why FIs Need to Maintain Risk Appetite and Not Place All Bets on De-Risking 28
Finance2 days ago

Risk Mitigation vs. Risk Avoidance: Why FIs Need to Maintain Risk Appetite and Not Place All Bets on De-Risking

De-risking aims to protect financial institutions from the increasing pressures placed by regulators and threats, associated with clients operating in...

Using AI to identify public sector fraud 29 Using AI to identify public sector fraud 30
Technology2 days ago

Using AI to identify public sector fraud

When it comes to audits in the public sector, both accountability and transparency are essential. Not only is the public...

Newsletters with Secrets & Analysis. Subscribe Now