Methodology

How we measure hidden alpha

PropertyAlpha measures what technology is worth to a building in dollars — the way owners, lenders, and appraisers already value real estate. We publish the principles. The coefficient tables stay internal, governed and versioned.

The value-creation equation

NOI lift ÷ cap rate = asset value created

Example: about $246 of NOI lift per unit per year at a 5.5% cap rate is about $4,500 of asset value per unit — roughly $0.89M across 200 units. Reports use the cap rate for the property's class (A 5.5%, B 6.0%, C 7.0%, hotels 8.25%). Figures are modeled.

Four dimensions

Every dollar is assigned to exactly one dimension, so nothing is counted twice.

Income

Revenue the building can generate or protect that it does not today.

Efficiency

Operating cost the building can remove — including energy, water, and compliance.

Resilience

Loss and risk the building can avoid — the lens insurers care about most.

Desirability

Demand, retention, and premium the building can command.

The Impact Score

A 0–100 index of how much of a building's achievable value is captured — measured against a best-in-class stack for its building type. It measures captured value, not how advanced a building is. Most of the score is the share of benchmarked value a building captures; the rest is coverage of the categories we value only in a property's full Impact Model.

Every report shows two numbers: the Gap, the dollar value not yet captured, and the Score, the credential. We show the score today and with your plan.

Weights are set at the category level — never at the vendor level — and are governed and versioned. They are not published. Every Partner category appears in the report, but a category with no benchmarked dollars carries no dollars and no extra score weight.

90–100
Optimized
Capturing nearly all available alpha.
70–89
Strong
Well-optimized, clear upside remaining.
50–69
Emerging
Meaningful alpha unlocked, meaningful gap.
Below 50
Hidden Alpha
Substantial value uncaptured — the biggest opportunity.

Input completeness

Every report shows how complete its inputs are — never a promise of accuracy. Missing data never blocks a result; it lowers input completeness, and we say so. Confirming a few more details raises it.

Inputs are always correctable: better data produces a recalculated report. The methodology itself is never hand-adjusted for a single building.

Sources

  • PropertyAlpha national benchmarks built from graded public sources — government data, national labs, audited filings, and industry surveys — versioned with a change log. Vendor marketing never sets a number.
  • Published cap-rate surveys for Class A apartments, adjusted by property class.
  • Public sources, cited where used: ENERGY STAR (U.S. EPA), the Insurance Information Institute, the NMHC / Grace Hill Renter Preferences Survey, and Fannie Mae and Freddie Mac green-financing program guidance.
  • Figures are national averages until your building's own data replaces them in the full Property Impact Model.

All figures are modeled decision-support — not a guarantee, not an appraisal, and not investment, tax, or legal advice.

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