04/28/2022 | by
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Business models are central to corporate performance and wealth creation, and even the most complex models can be reduced to six basic variables, says Chris Volk, a veteran REIT executive, business leader, and author.

Speaking on the REIT Report, Volk discussed his upcoming book, The Value Equation, which will be published on May 10.

Volk also discussed his career, during which he introduced and led three public companies. One of those was STORE Capital Corp. (NYSE: STOR), his third net lease iteration, formed in 2011. Combined, the companies provided more than $20 billion in growth capital to thousands of businesses, he said.

Volk’s new book looks at how businesses create wealth and focuses on the business model approach he developed and utilized throughout his career.

“Business models are central to corporate performance and wealth creation. To be really simplistic about it, the name of the game is to create a business that’s worth more than it cost to create. Most companies in the United States and around the world actually don’t rise to this level. To do this you have to create a return that doesn’t just realize, but exceeds, the cost of capital,” Volk said.

According to Volk, the most complex corporate business models can be whittled down to six basic variables, which comprise the value equation. The six variables determine current pre-tax equity rates of return. “For REIT investors, it’s pretty simple because the current equity rate of return pre-tax is an AFFO yield,” Volk said.

Meanwhile, non-REIT dedicated REIT shareholders tend to be “value players,” so focusing on business models is really important, Volk added.