Dec 15

Blog: Data Monetization Index for Real Estate

January 7, 2022

Summary

Most publicly-traded real estate companies in the United States have a Data Monetization Index (DMI) of 5.5 percent. However, the absolute data valuation varies from $775 million for Federal Realty Investment Trust to $8.8 billion for American Tower Corporation. In addition, the data valuation per property tends to differ by type of real estate company. For example, Residential REITs have a data valuation in the range of $5.3 million to $8.9 million per property.
Our data valuation is based on empirical evidence regarding the impact of poor data quality on property values.
A higher DMI is generally preferable across companies and industries. By way of reference, internet companies have a higher DMI because most of their enterprise value is derived from data. For example, Google’s DMI is 93 percent as we will discuss in a separate blog. However, there is an upper ceiling for the DMI in real estate companies because their valuations are primarily driven by the underlying property values.

Definitions
  • Data Monetization Index (DMI) = Data Valuation / Enterprise Value
  • Data Valuation = Real Estate Data Valuation
  • Enterprise Value =  Equity Value + Long Term Debt - Cash, a key metric used in the investment community
  • Real Estate Investment Trust (REIT) is a company that owns income-producing real estate
  • Industry categories include Health Care REITs, Hotel & Resort REITs, Industrial REITs, Office REITs, Real Estate Services, Residential REITs, Retail REITs and Specialized REITs


Methodology
The YDC team recently published a DMI for top real estate companies  in the United States. Here is an example for
Federal Realty Investment Trust along with a benchmark for other real estate companies.

The data valuation is based on real estate data only and relies exclusively on publicly-available data sources from November 2021. Going forward, we will be working to make the data valuation more real-time.