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A Superior Way to Grade European REIT Execs: Green Street Management Value Added (MVA) Grades
European REIT Coverage Universe: Three-Year MVA Grade Distribution
Across 42 REITs/PropCos under coverage
Green Street’s MVA framework focuses on factors that REIT management teams directly control, measuring value added or subtracted via balance sheet management, capital allocation, and all other factors not related to performance of the real estate portfolio. MVA accordingly adjusts for price changes occurring from real estate sectors or locations, which are often a function of good fortune, not good management. MVA consequently equals Net Asset Value (NAV) growth minus leveraged growth in company-specific portfolio value.
Sustained external growth, when trading at NAV premiums, is the best way to generate MVA. Senior executives in the Nordic and Self-Storage sectors have consistently outperformed.
This study demonstrates how REIT management teams ascribed better MVA grades warrant premium pricing versus their peer group. MVA is a key driver that guides Green Street’s assessment of how much value to assign to each REIT’s Franchise Value (i.e. subjective quality of management team), the most predominant factor incorporated into final warranted premiums or discounts to NAV. Click here to download additional insight from Green Street's proprietary insight report.
Green Street Advisors, LLC
Green Street Advisors (UK) Limited is an affiliate of Green Street Advisors, LLC, which was founded in 1985 and is the preeminent independent research and advisory firm concentrating on the commercial real estate industry in Europe, the United Kingdom and the U.S. The company is a leading provider of real estate research, analytics, and data on both the listed and private markets. Learn more at www.greenstreetadvisors.com.