John Carrafiell, co-CEO of BGO, a prominent global real estate investment manager, has taken a unique approach to identifying undervalued assets. That’s right, BGO has nearly $89 billion under management! Through the use of advanced data analytics, it is able to make informed investment decisions and has set itself apart as an industry leader. The firm has recently focused all its energy on home base — Las Vegas. Chambers of commerce and development agencies often view it as a great place to invest due to its lower rents, taxes, and labor costs.
At the heart of BGO’s strategy is a dedicated data science team, consisting of six professionals who work closely with Carrafiell and the firm’s asset management and acquisitions teams. This partnership makes it easier than ever to integrate data-driven insights right into the decision-making process. Carrafiell is justifiably proud of this collaborative work with the chief data scientist. Collectively, they illustrate just how important and competitive the data-focused investment world of today has become.
BGO’s creative approach even extends to the use of a computer model that helped them analyze precedent-setting deals going back two decades. Through eliminating the human element from the analysis, this new approach produces data-driven findings to guide evidence-based investment strategies. The model identified Las Vegas as a strong opportunity market. This encouraged BGO to play a different role by investing in an industrial development project with partners at Northpoint Development.
As one example, the firm underwrote rents at $5.88 per square foot when it purchased its Las Vegas investment. For context, since that time the broader market has far exceeded that number, with BGO now coming in at roughly $9 square foot rents. This positive conclusion is a credit to the strength of their analytical approach.
Allocate and conquer These markets have proven fruitful, creating big returns for the firm. BGO has carefully analyzed prospective logistics routes to inform its investment criteria. This adds a layer of transparency and ensures all decisions are rooted in rigorous data analysis.
The Inland Empire of southern California has become the starkest cautionary tale in BGO’s research. The firm’s model indicated that this region had become prohibitively expensive for investment, prompting a strategic pivot towards more favorable markets. This flexibility speaks to BGO’s dedication to making decisions based on data and research, rather than assumption.
BGO’s data science team employs a variety of data inputs, combining free resources from government agencies with purchased data from telecom providers. This wide variety of data tools increases the sophistication of their analytical models creating the ability to accurately forecast and assess risk. Carrafiell acknowledged that AI has already dramatically changed their investment research models, “putting them on steroids,” he said. This cutting-edge innovation helps BGO to be at the forefront of market trends, enabling the firm to make intelligent investments that seize upon developing opportunities.