Transparency is an important element in the REIT story and can be thought of in two ways. REITs provide tax transparency, meaning that the REIT pays no corporate tax in exchange for paying out strong, consistent dividends. Rather, taxes are paid only at the individual shareholder level. In addition, REITs provide operating transparency, meaning that listed REITs are registered and regulated by the Securities and Exchange Commission and adhere to high standards of corporate governance, financial reporting and information disclosure. They are also covered by a robust group of Wall Street and independent analysts.
In fact, the U.S. REIT industry’s corporate governance has been recognized by RiskMetrics Group as among the best in the stock market. In recent years, RiskMetrics Group ranked the REIT industry in the top tier among all industries in the quality of its corporate governance. In an era when too many companies have been exposed for poor business practices, good governance wins investors’ attention.
Corporate Governance Rankings