The business of being a residential landlord is, on the surface, pretty simple. You own a property and you rent it out. Your profits depend on your rental income minus costs on the one hand, and on the change in value of the property on the other. The value of the company is the house price minus the mortgage. It's all highly intuitive.
You'd think pinning a value on Grainger (GRI) Britain's largest listed residential landlord, would be correspondingly intuitive. Sadly not. The corporate accounting equivalent of the house-price-minus-mortgage calculation is 'net asset value' (NAV): assets minus liabilities. But Grainger publishes two figures for NAV, neither of which are close to the NAV calculated under International Financial Reporting Standards. IFRS NAV was 122p a share as at 31 March, but the company prefers to cite 'gross' NAV of 272p and 'triple net' NAV of 228p. Its shares are currently priced at 184p. So are they cheap or expensive? Clearly the answer depends on what you include in NAV.
Grainger is not a lone case. Although its spread of NAV figures is unusually broad, valuing most property companies depends on working out what measure of book value is most realistic. And property companies aren't the only ones. Companies valued on the basis of earnings multiples routinely adjust those earnings to exclude 'exceptional' IFRS costs they feel distort their 'underlying' performance.