08/28/2009 | By Matthew Bechard
By Matt Bechard
The challenges of an economic slowdown and illiquid credit markets have caused many REITs to shift their staffing focus away from transactional-based roles toward functional-based positions, according to Bill Ferguson, co-chairman and co-CEO of FPL Advisory Group.
"When times get tough, companies shift their attention to functional areas like asset management, property management and leasing. They look for executives who can run the existing real estate business better, more efficiently," Ferguson said. "As things improve, we will see a returned focus on growth areas like investment management, development and capital raising."
Jeremy Banoff, managing director of FPL Associates, said he is seeing many listed REITs, which have been able to stabilize their balance sheets through equity offerings, retain their staff in transactional-based roles even as those areas of the business are either slowed or stopped altogether.
"We are seeing companies retain these individuals and having them focus on other parts of the organization, which will expose them to broader aspects of the business and allow for a holistic understanding of the company's operations," Banoff said. "This way when the market does improve they will have staff in place to react very quickly."
FPL Associates conducted the 2009 NAREIT Compensation Survey, the most comprehensive source of compensation information for the REIT and publicly traded real estate industry. According to the survey, 49 percent of respondents had instituted a hiring freeze in 2008/2009. Banoff said that number was down to 11 percent when respondents were asked if they planned to issue a hiring freeze in the next 12 months.
Banoff attributed that in part to the psychological boost listed REITs gained in being able to access the public markets for equity capital. Ferguson added that the initial shock caused by the credit crisis has abated and companies now feel they have survived the worst and from a staffing perspective are planning for the future.