Updated over 9 years ago on . Most recent reply
REIT accounting - COGS and margin
Hi. I'm trying to compare some of the private deals mentioned here with public REITs.
Looking up the income statements for Equity Residential (trades as EQR) I find a line for cost-of-goods-sold. What is this for a REIT? Is it the cost of maintaining the apartments, everything from the salary of the building manager to the cost of the new bathroom fan? What is under SG&A? Is it the sales reps, accounting department, etc?
I also see margins of 8% to 25% on public REITs (whats left over after deducting expenses from rent). For private deals mentioned elsewhere on the site, people are using a 50% rule -- expenses are 50% of rent. For these public REITs it is more like 80%. Why is this? Is an individual investor that much more efficient than a giant like Equity Residential?
Am I comparing the right things, or have I messed up somehow?