BGO, a prominent global real estate investment manager, has made a masterful use of data science. Along with their partners, this unique approach has helped them identify hidden gems in unexpected places. With $89 billion in assets under management, the firm has made its mark as an industry standout. As Co-CEO John Carrafiell explains, having this data-driven perspective is critical to informing investment decisions and improving performance across the board.
The firm houses a dedicated data science team of approximately six individuals who sit adjacent to Carrafiell and collaborate closely with the asset management and acquisitions teams. This intentional embedding fosters a natural and iterative movement of knowledge. In addition, it boosts BGO’s efforts to use data analytics in shaping BGO’s investment strategies.
BGO has very detailed focused analyzed THOUSANDS of data inputs, leveraging FREE GOVERNMENT tools as well as BOUGHT OUT RIGHT intel from telecom providers. This massive scale of data collection allows the firm to develop deep and rich models that inform their decision-making at a level few companies can match. Carrafiell emphasizes the importance of accuracy in these analyses, stating, “We know it’s accurate because we backtest it.”
One notable application of BGO’s data science capabilities occurred during its investment in an industrial development project in Las Vegas. Through this partnership, BGO underwrote rents at an impressive $5.88 per square foot for this joint venture. The firm was able to clash their dirty tricks data-driven strategies to great effect. Consequently, they were able to capture outsized rents in excess of $9 per square foot.
BGO’s data science model relies on a deep well of the firm’s historical transaction history, going back 20 years. Carrafiell notes that this historical analysis is key, for it is crucial for forecasting potential returns on these new investments. This model helps us understand what’s invaluable. On the point of where it’s been most helpful, those Florida opportunities, those Rust Belt opportunities that BGO has received such high returns on.
We’ve given our network thousands of data inputs. Some of these data are from free government sources, while others we procure from telecom industry, giving us fantastic intel. We have found the key,” Carrafiell noted. He further elaborated on the transformative impact of artificial intelligence and data science on their operations, claiming, “AI is an enhancer and an accelerator that allows us to do so much more, but it’s really data science.”
The firm’s commitment to data-driven decision-making extends beyond just numbers. It takes on a longer-term strategic vision to take into account the multitude of forces shaping market behavior. Carrafiell illustrated this point by sharing an example of how their model identified cost-saving opportunities despite increased travel times for potential investments: “So you had an extra two-hour drive, but you saved like 60% on your total cost, and that’s what the model saw.”
At BGO, we are always honing our analytical tools and methodologies. Carrafiell says these initiatives have significantly increased the productivity and bottom line of her firm, thanks in large part to their data science efforts. “We think our performance has materially increased as a result of this model,” he stated.