Yardi’s Randy Moss on the Link Between Regulatory Changes, Rising Energy Costs, NAV

Randy Moss, industry principal at Yardi, joined the REIT Report podcast to discuss the relationship between regulatory changes, rising energy costs, and net asset value (NAV), as well as how improving energy and utility data quality can reduce risk and support stronger REIT valuations. Yardi is a Nareit Real Estate Sustainability Partner.

When evaluating potential real estate investments, cash flows often take center stage, Moss noted. Investors are increasingly looking for properties that not only have robust cash flows but also incorporate efficiency improvements. Enhancements that boost property efficiency can lead to maximized rents per square foot and higher occupancy rates, ultimately contributing to a more favorable NAV.

Moss discussed how recent regulatory trends have introduced new challenges for real estate investors. Building performance standards (BPS) have emerged, mandating that owners meet specific energy and greenhouse gas emissions caps. As these regulations evolve, they come with significant penalties for non-compliance, impacting long-term cash flows dramatically.

New York City’s Local Law 97 sets stringent limits on emissions and requires reporting based on historical data. With nearly 27,000 buildings affected, compliance is a critical factor in maintaining property value and investment viability.

Chapters: 

00:50 Meet The Guests 
01:24 How Investors Value Buildings 
02:22 New Risks To NAV 
02:55 Building Performance Standards 
04:10 Local Law 97 Fines 
05:40 Compliance Keeps Tightening 
06:50 Why Data Quality Matters 
08:22 AI With Human Oversight 
10:50 Why Power Prices Rise 
13:34 Future Policy Uncertainty 
14:56 Mitigating Energy Cost Risk 
18:08 BPS Lease And Tracking Tips 
20:48 Bring In Leadership 
22:49 Wrap Up And Subscribe