• Real Estate and Mortgage Backed Securities

  • Market Forecasting
  • Mortgage Backed Securities
  • Surveillance and Valuation
  • Real Estate Company Valuation
    (REITs and Developers)
    Real Estate, the largest asset class in the world, is particularly opaque due to asset and neighborhood level heterogeneity. Visual, quantitative and financial modeling tools partially offset the scarcity of real estate data and are essential for asset valuation. dōnō consulting specializes in market forecasting, performance analysis, valuation, re-underwriting portfolios and mortgage backed securities that assists investors to visualize performance and potential growth.
    dōnō consulting uses cutting edge econometric tools with granular macroeconomic and real estate fundamentals panel data models to forecast markets performance. From modeling cap rates at the metro level to predicting home prices using the Case Shiller Index, we have extensive market forecasting experience in real estate.
    While MBS analysis uses many of the same tools and techniques as real estate valuation, it is significantly more quantitative due to the waterfall structure of tranches – and the diversity of the underlying assets. It is the unique overlap between our three specializations: Quantitative Analytics, Financial Research and Real Estate.
    dōnō consulting specializes in creating quantitative models of CMBS deals to generate default rate and loss given default expectations. For large loans, we augment quantitative models with property level re-underwriting, while rigorous fundamental research yields sub market level assumptions.
    Early macro models have given way to roll rate modeling, which has high accuracy rates yet limited predictive power in gauging tipping points. The millions of data points for residential mortgages need large data management tools and unique quantitative skills to create dynamic default and prepayment models. dōnō consulting utilizes mortgage attributes, property details and macroeconomic variables to create roll rate models that reflect broader economic realities.
    For large portfolio owners, property visits are expensive and time consuming; it also falls short of a rigorous, unbiased appraisal of the property's value since it depicts a single aspect of valuation. Property value should additionally be estimated by reviewingthe submarket level cap rate,the NOI of the property and by scrutinizing comparable property sales. If granular data is obtainable, hedonic pricing models can also be used to estimate the value of every additional attribute of a property in an area. dōnō consulting has the know-how to execute econometric models of cap rates, estimate discount rates, and predict rents to re-underwrite and value individual properties within a portfolio or a commercial mortgage backed security.
    REITs do not pay corporate taxes and distribute 90% of their profits as dividends; this unique legal structure makes them essentially a real estate pass-through. dōnō consulting's knowledge of core real estate thus helps us value the building blocks of a REIT, i.e. its income generating properties. The net worth and performance of real estate developers can also be forecasted using their land banks, recent acquisitions and the current financial scenario. Tying in property level valuations and forecasts with financial models, we generate Net Asset Value (NAV) estimates for both REITs and developers.

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