data mining: it ain’t diamonds - lyndon b. johnson ...€¦ · data mining: it ain’t diamonds...
TRANSCRIPT
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DATA MINING: IT AIN’T DIAMONDS
DATA MINING:
IT AIN’T DIAMONDS
2015 Property Tax Institute
“IF WE HAVE DATA, LETS LOOK AT DATA. IF ALL WE
HAVE IS OPINIONS, LET’S GO WITH MINE.”
~ JIM BARKSDALE,
FORMER NETSCAPE CEO
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NOTABLE DATA QUOTES:
DATA MINING: IT AIN’T DIAMONDS
“YOU CAN HAVE DATA WITHOUT
INFORMATION, BUT YOU CANNOT HAVE
INFORMATION WITHOUT DATA.”
~ DANIEL KEYS MORAN
“DATA REALLY POWERS EVERYTHING THAT WE
DO.”
~JEFF WEINER, LINKEDIN
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DATA MINING: IT AIN’T DIAMONDS
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WHAT IS DATA MINING? 4
DATA MINING: IT AIN’T DIAMONDS
• A process used by companies to turn raw data into useful information. –Investopedia
• Practice of automatically searching large stores of data to discover patterns and trends that go beyond simple analysis. -‐Oracle
• Practice of searching through large amounts of computerized data to find useful patterns or trends. –Merriam Webster
IS DATA MINING USEFUL?
IBM WATSON
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• Uses natural language processing: Helps understand unstructured data which makes up as much as 90% of the world’s current data (news articles, research reports, social media posts)
• Hypothesis generation and evaluation:Applies analytics to weight/evaluate responses based on evidence
• Evidence based learning: Allows Watson to get smarter with each iteration and interaction. It is constantly learning
PRISM (NSA)• Data mining program operated by the NSA
since 2007 – publicly acknowledged by Edward Snowden leak
• Monitors private phone, email, and other internet communications
• Gets information from Apple, Google, Microsoft, YouTube – (Some of the largest databases in the world)
• Google has stored every web search ever done on its servers
Source: IBM Sources : Washington Post, USA Today
GOOGLE’S DATA MINING 6
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Source: Wall Street Journal
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DATA MININGAND MASS APPRAISAL
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WHAT IS MASS APPRAISAL?
IAAO DEFINITION:
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• Mass appraisal is the systematic appraisal of groups of properties as of a given date using standardized procedures and statistical testing.
• Mass appraisal requires the development of a valuation model capable of replicating the forces of supply and demand over a large area.
• Mass appraisal utilizes statistical methods to gauge accuracy and consistency of valuations.
DATA MINING: IT AIN’T DIAMONDS
MASS APPRAISAL MODELS
CREATING
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APPLYING TESTING
• Classifying appraisal groups
• Collect data
• Interpret data
• Create model
• Apply model to appraisal groups
• Make adjustments for individual characteristics
• Allow for changes as data changes
• Primary tool is a ratio study
• Median level
• Average Absolute Deviation
• Coefficient of Dispersion
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PRIMARY SOURCES OF DATA 10
• Multiple Listing Service –MLS• Settlement statements
• Fee appraisals• Cost manuals• Market publications
• CoStar• Loopnet• Income statements / rent rolls
• Settlement statements• SEC documents• Market publications• Private data sources
DATA MINING: IT AIN’T DIAMONDS
Residential Commercial
RESIDENTIAL DATA 11
• Multiple Listing Service -‐ used for decades and is the most reliable data source for homogeneous residential neighborhoods. Has limitations in high end residential markets.
• Settlement statements -‐ invaluable part of mass appraisal and contain several valuable pieces of information: • Loan amount, Fee appraisal, Broker commissions, etc.
• Fee appraisals -‐ provide an opinion of value, square footage, and comparable property information. • Comparable property information is key to increasing your data intake.
• Cost manuals -‐ help with unique properties without adequate sales comps.
• Market publications -‐ real estate journals, newspapers, and other publically available information.
Residential = Comparable Sales = MLS
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COMMERCIAL DATA 12
• CoStar – Most utilized form of sales data collection. Not as comprehensive as MLS, and some data is incorrectly reported.
• Loopnet – Provides ample asking rents and “for sale” prices. Confirmed sales information varies and less accurate than CoStar.
• Income statements/Rent rolls– Give a great snapshot of a property, but may not reflect current occupancy or rent potential.• Great for model building if accurate
• Settlement statements –Same as residential -‐ invaluable part of mass appraisal and contain several valuable pieces of information: • Loan amount, Fee appraisal, Broker commissions, etc.
• SEC Documents – Publicly traded companies will report sales prices and other information on their 10-‐K and 10-‐Q documents• Great for investment grade properties
• Internet – Publicly available data sources that should be utilized
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SEC DOCUMENTS 13
PURE MULTIFAMILY REIT
• These sales represent Pure Multifamily REIT’s 2012 – 2014 property acquisitions• Data includes: Property name, Number of units, Going-‐in cap rate, Loan to
value, Physical and Leased occupancies – You can also calculate property NOI
DATA MINING: IT AIN’T DIAMONDS
SEC DOCUMENTS CONT. 14
PURE MULTIFAMILY REIT – 2014 ACQUISITIONS
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• On June 27, 2014, Pure Multi ,through theUS REIT,acquired Walker Commons,a multi-‐family apartment community, located in Houston, Texas, for a purchase price of$43,800,000,p lus standard closing costsand adjustments. The acquisition was financedwithproceedsfrom the May 2014Offering anda new five yearmortgage in the amountof $28,470,000.
• On August 28, 2014, Pure Mu lti, through the US REIT, acquired the Preserve, a multi-‐family apartment community, located in Plano, Texas, for a purchase price of$41,000,000,p lus standard closing costs andadju stments. This acquisition was financedwithproceedsfrom the July 2014Offering anda newsevenyearmortgage in the amountof $24,600,000.
COMMERCIAL MARKET PUBLICATIONS
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• These are the supplemental data providers that can boost your mass appraisal product!
• Twitter, Freddie Mac, Fannie Mae, Facebook, YouTube, Texas A&M Real Estate Center, Industry websites, Company websites, BizNow, Compstak, Real Massive, etc.
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All of the above icons are hyperlinked to the websites
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EX. OF SUPPLEMENTAL DATA 16
April 2014
Here are the highlights:
• A stand-‐alone, 14,000-‐square-‐foot building dubbed “The Jewel Box” will be built on theCheesecake Factory’s existing parking deck facing Westheimer. The space will house luxury retailers who want visibility. Noble said several “new-‐to-‐market” tenants have expressed interest in the plans, but would not elaborate on which retailers are interested or how much rent the space will charge.
• Saks Fifth Avenue will move into a renovated 198,000-‐square-‐foot space located next to its existing space. Saks is set to open in early 2016. The existing Saks building will be renovated, providing 110,000 square feet of space for new restaurants and retail. Construction will begin on this space after Saks moves into its new building. Saks will stay open during the renovation. Saks will take up part of Macy’s Inc. (NYSE: M), which will consolidate into its Galleria store facing Hidalgo Street. The consolidation will affect 136 positions, according to the Texas Workforce Commission. However, the company is conf ident that most of those employees will f ind jobs at other local Macy's stores.
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Sou rce: Hou ston Bu sin ess P ress
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Financial Data at the time of Refinance:• New loan amount of $150,000,000• Interest Rate – 3.31%• Note Date – 2/24/2015
• Maturity Date – 3/1/2025• Interest-‐Only Period – 120 months• Amortization Type – Interest Only• Additional Debt Balance –
• $734,000,000• $316,000,000
• LTV with all debt – 47.7%•10% NOI growth from ‘12-‐’14
Implied cap rate of 4.06%with Underwritten NOI and Appraised Value
SUPPLEMENTAL DATA CONT.
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SUPPLEMENTAL DATA CONT. 18
Harwood Center In Dallas, TX
UBS has originated a $90 million fixed-‐rate loan on a Dallas office building.
The 724,000-‐square-‐foot Harwood Center is owned by Fortis Property of Brooklyn.
The 36-‐story building, at 1999 Bryan Street in the central business district, is 84.8% leased, according to CoStar. The tenants include Omnicom (339,000 sf until 2019), Jacobs Engineering (81,000 sf until 2025) and the U.S. Department of Education’s Office for Civil Rights (61,000 sf until April 2015).
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SUPPLEMENTAL DATA CONT. 19
• Fee Appraisal value at time of refinance –• Harwood Center -‐ $124,000,000
• Appraisal Date – 6/2/2014• LTV = 72.6%
•Most recent financials at time of refinance –
• EGI -‐ $15,145,993• Operating Expenses -‐ $6,731,687
(44% with Taxes)
• NOI -‐ $8,414,306• Implied Cap Rate – 6.78% on
appraised value
HARWOOD CENTER
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20SUPPLEMENTAL DATA CONT.
College Station, Texas — Columbus Pacif ic Properties (CPP) has acquired The Cottages of College Station, a 1,354-‐bed cottage community that was developed by Capstone Collegiate Communities and opened in August 2013. It is billed as the largest student housing community in the College Station market. CPP says the Cottages of College Station is the company’s f irst recently built class A community and the only cottage product in the portfolio.
Will Baker, senior vice president and managing director, partnered with Tim Bradley of TSB Capital Advisors, originated and structured $66.4 million as a 10-‐year loan with two years of interest only and 30-‐year amortization for Cottages of College Station in College Station, Texas. Cottages of College Station is a 1,354-‐bed cottage/garden style community consisting of 192 one, two and three-‐story apartment buildings.
DATA MINING: IT AIN’T DIAMONDS
Columbus Pacific Properties Acquires The Cottages of College Station
TWITTER + FREDDIE MAC 21
• Was chartered in 1970 by Congress to stabilize the nation’s residential mortgage markets
• Expand opportunities for homeownership and affordable rental housing
• Participate in secondary mortgage market by purchasing mortgage loans and mortgage related securities
• Issue guaranteed mortgage-‐related securities – CMBS, CME
• http://freddiemac.mwnewsroom.com/News.aspx?categoryname=Mortgage%20Securities
WHAT IS FREDDIE MAC
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FREDDIE MAC – K-DEAL 22
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K-DEAL GUIDELINES 23
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K-DEAL GUIDELINES CONT. 24
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SECURITIZATION INFORMATION 25
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SECURITIZED DEAL STRUCTURE 26
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FREDDIE MAC SERVICERS 27
If you see these lender names – Their loans are going to be securitized at some point…..
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28REMEMBER THIS TWEET?Columbus Pacific Properties Acquires The
Cottages of College StationCollege Station, Texas — Columbus Pacif ic Properties (CPP) has acquired The Cottages of College Station, a 1,354-‐bed cottage community that was developed by Capstone Collegiate Communities and opened in August 2013. It is billed as the largest student housing community in the College Station market. CPP says the Cottages of College Station is the company’s f irst recently built class A community and the only cottage product in the portfolio.
Will Baker, senior vice president and managing director, partnered with Tim Bradley of TSB Capital Advisors, originated and structured $66.4 million as a 10-‐year loan with two years of interest only and 30-‐year amortization for Cottages of College Station in College Station, Texas. Cottages of College Station is a 1,354-‐bed cottage/garden style community consisting of 192 one, two and three-‐story apartment buildings.
DATA MINING: IT AIN’T DIAMONDS
STRUCTURED PASS THROUGH CERTIFICATES
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FREDDIE MAC (K-DEAL)COTTAGES OF COLLEGE STATION
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Property Name Loan Originator Address
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COTTAGES OF COLLEGE STATION
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Type of Housing Occupancy Loan Purpose
COTTAGES CONTINUED 32
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Appraisal Date Appraisal Amount Loan to Value
33COTTAGES CONTINUED
LTV @ Maturity
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Underwritten Proforma
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34COTTAGES CONTINUED
Most Recent Financials Second Most Recent Financials
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COTTAGES CONTINUED 35
Monthly Replacement Reserve
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SUMMARY OF DATA
LOAN AMOUNT AND PURPOSE
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INTEREST RATE AND D.S.
AMORTIZED TERM AND ACTUAL TERM
Loan Amount -‐ $66,460,000
Purpose -‐ Acquisition
APPRAISED VALUE AND L.T.V. FINANCIALS ESCROW AMOUNTS
Int. Rate –3.9699%
Debt Service – $319,978.11 (Monthly)
Amortized term -‐ 30 years
Actual Loan Term – 10 years
Appraised Value -‐$ 84,000,000
L.T.V. –79.1%
U.W. EGI -‐ $10,401,951
U.W. Exps. -‐ $4,603,000
U.W. NOI -‐ $5,798,951
Tax Escrow -‐ $383,236 Initial plus $63,873
monthly
Reserves -‐ $16,925 (Monthly)
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$5,798,951 / $84,000,000 = 6.9% Cap Rate
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FANNIE MAE 37
• Leading source of residential mortgage credit in the U.S. secondary mortgage market
• Guarantee and purchase loans from mortgage lenders
• Single family mortgaged backed securities
• Multifamily mortgage backed securities
• http://fapt.efanniemae.com/MFSecuritiesLocator/jsp/general/welcome.jsp
WHAT IS FANNIE MAE
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THE MANSIONS AT LAKEWAY 38
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THE MANSIONS AT LAKEWAY 39
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THE MANSIONS AT LAKEWAY 40
Cap rate at time of appraisal -‐ $3,626,769 / $65,700,000 = 5.52%Estimated purchase price of $64,517,400
DATA MINING: IT AIN’T DIAMONDS
FACEBOOK PAGES 41
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YOUTUBE 42
• Virtual Tours of properties• For sale property videos
• Real estate video podcasts and updates
• Several large commercial firms have YouTube channels you can subscribe to
REAL ESTATE VIDEOS
• Realtor.com• CBRE• Jones Lang LaSalle
• Cushman and Wakefield• GlobeSt.com• Texas A&M R.E. Center• Transwestern
• REIT.com
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REAL ESTATE CHANNELS
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TEXAS A&M REAL ESTATE CENTER43
• Sign up to receive RECON updates with this link:
http:/ / recenter.tamu.e du/rec on/rec onsubsc ribe.as p
• Information updated twice weekly• Currently has around 40,000
subscribers• Website address:http:/ /www.recenter.tamu. edu/
RECON WEBSITE FEATURES INCLUDE:
• The Blog
• News Talk Texas• Red Zone Podcast• Tierra Grande –magazine link• Videos
• Market Data Sources• Presentations• Texas Economy Reports
• Data, Data, Data
DATA MINING: IT AIN’T DIAMONDS
Source: Texas A&M Real Es tate Center Webs ite
GREAT DATA LINKS 44
• Berkadia Commercial Mortgage -‐ http:/ /www.berkadia.com/newsandresearch/default.aspx
• Arbor Commercial Mortgage -‐ http:/ /www.arbor.com/
• CBRE Capital Markets (multi-‐hous ing) -‐ http:/ /www.cbre.us/services/capitalmarkets/multihous ing/Pages/home.aspx
• Axiometrics -‐ http:/ /axiometrics .com/ index.html
• Gobest.com -‐ http:/ /www.globest.com/
• Cushman and Wakefield -‐ http:/ /www.cushmanwakefield.com/
• Intergra Realty Resources -‐ http:/ /www.irr.com/ Index.asp?x=010|010&~=
• HFF L.P. -‐ http:/ /www.hfflp.com/Default.aspx
• Hillwood Investment Properties -‐ http:/ /www.hillwoodinvestmentproperties .com/
• Lis t of publicly traded REIT’s in U.S. -‐ http:/ /en.wikipedia.org/wiki/Lis t_of_public_REITs_in_the_United_States
• Lis t of Hotel REIT’s -‐ http:/ /www.bloomberg.com/markets/companies/ reits -‐hotels/
• Low-‐income Hous ing Tax Credit Underwriting Reports -‐ http:/ /www.tdhca.s tate.tx.us/ rea/reports -‐all-‐other.htm
• Real Es tate Investor HQ -‐ http:/ /www.reihq.com/
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PRIVATE DATA SERVICE PROVIDER
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• Professional data service provider• Data for the following property types:
• Hotels• Office Buildings• Multifamily• Retail
• Industrial• Proven way to integrate the data and
present it to property owners and the ARB
• More affordable than CoStar
DATA CONSULTING FOR HIRE
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QUESTIONS46
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