Real Estate Marketing & Beyond
The National Rental Home Council (NRHC) published a new report a few days ago establishing recommended best practices for defining, calculating, and reporting key financial and operational disclosure metrics for the single-family rental (SFR) industry. Green Street Advisors’ Advisory and Consulting Group provided subject matter expertise and worked with NRHC members to develop standardized definitions and calculations of common disclosure metrics and help document industry best practices. This report will help public and private markets better understand the single-family rental industry’s performance and valuation measures and improve the consistency and transparency of information across the industry.
“As the single family rental industry continues to grow and mature, investors and others are seeking clearer and better insights into the industry’s basic performance and valuation measures,” said NRHC Board President and Invitation Homes CEO John Bartling. “In agreeing to a set of best practices for disclosure, we are taking a significant step forward in the continued evolution and maturation of our industry.”
To produce the recommended common language outlined in the report, Green Street Advisors’ Advisory and Consulting Group reviewed and compared NRHC members’ existing disclosure and definitional practices to identify a set of metrics deemed important to the single-family rental industry and broader REIT universe. The resulting document provides “best practices” for calculating and reporting portfolio, leasing, income and asset value metrics, with a non-binding recommendation that industry participants adopt these best practices to facilitate consistency and comparability across companies throughout the sector.
The report is 34 pages in length. Much to long to thoroughly cover in a short article. You can read the entire report here.
While the best practices outlined in this publication are non-binding upon NRHC members, the NRHC recommends that its member firms adopt the guidelines in the report. Consistency and transparency of disclosure helps support investor confidence, and investor confidence contributes to the reduction of the cost of capital for any industry.
The main categories covered are:
What follows are a few of the definitions the report includes for standardization purposes.
This is only a small sample of the best practice definitions released in the NRHC report. You can view the entire 34 page report here.
To some, this may seem like over regulation but these best practices are nonbinding and are intended for institutional investors. A better understanding of this relatively new, powerful, and growing industry sector can only help individual private investors.
Please leave a comment if this article was helpful or if you have a question.
Author bio: Brian Kline has been investing in real estate for more than 35 years and writing about real estate investing for 10 years. He also draws upon 30 plus years of business experience including 12 years as a manager at Boeing Aircraft Company. Brian currently lives at Lake Cushman, Washington. A vacation destination, a few short miles from a national forest. With the Pacific Ocean a couple of miles in the opposite direction.
Thanks Brian for pulling this together. I plan to read the entire report this weekend! What do you think comes next in the process?
Hi Jeri,
Thanks for the comment. As for what comes next, it's difficult to say exactly. One of the primary purposes of the report is driving more transparency into this relatively new sector of the industry. It's a voluntary program. The number of companies voluntarily moving towards definition standardization will be a driving force that determines the success of this initiative. Something that I did not do is examine how these definitions and terms align with SEC requirements. Most of these businesses are required to file with the SEC and will certainly follow that path first.
Best wishes,
Brian