David De La Rosa, senior vice president of advisory consulting at Green Street Advisors, joined REIT.com for a video interview at REITWorld 2016: NAREIT’s Annual Convention for All Things REIT at the JW Marriott Phoenix Desert Ridge.
De La Rosa discussed best practices for international real estate companies. He noted that best-in-class real estate companies in the United States share a number of characteristics: high-quality portfolios, specialized investment strategies, good capital allocation, strong balance sheets and limited development pipelines.
“More importantly, they have really good corporate governance and shareholder-friendly practices,” he said.
Foreign real estate companies wishing to emulate the U.S. REIT model should educate themselves on the history of the U.S. REIT market and review case studies of successes and failures, De La Rosa said. They should use this knowledge to evaluate potential changes to their own strategies, he added.
De La Rosa stressed that the key ingredients to becoming best-in-class companies are similar across borders, even though slight tweaks may be necessary. Mexico, for example, has regulatory limits on leverage, altering balance sheet management, he explained.
But despite the differences between countries, the U.S. REIT model remains a “very valuable reference point” for best practices, De La Rosa emphasized.
Meanwhile, he noted that the global nature of investment means management teams need to adopt a broad approach to benchmarking, not just comparing their companies to their domestic peers.
“Management teams that embrace this idea and embrace U.S. REIT best practices will have greater success in attracting a broader and global investor base,” De La Rosa said.