6/3/2020 | By Sarah Borchersen-Keto
Business leaders play an essential role in moving their companies and the broader economy toward a safe reopening following nearly three months of COVID-19-related shutdown, according to a panel of REIT CEOs speaking June 2, the first day of Nareit’s REITweek: Virtual Investor Conference.
The panel was moderated by A. William Stein, CEO of Digital Realty Trust, Inc. (NYSE: DLR) and 2020 Nareit Chair. He noted that the conference is taking place during a historically difficult time for the United States, with more than 100,000 deaths from COVID-19 and tensions raised across the country following the death of George Floyd in Minneapolis. “We recognize the pain and anxiety many within our communities are facing,” he said.
James Connor, chairman and CEO of Duke Realty Corp. (NYSE: DRE), observed that business leaders need to lead the reopening process.
“We now have an understanding of how to protect our people, and we’re in a position to put the plans, the processes, and protocols in place for the health and safety of all,” he said. “It’s incumbent on all of us to make the tough decisions to start leading us out of the situation caused by COVID-19 and getting our people safely back to where they can be productive.”
Ventas, Inc. (NYSE: VTR) Chairman and CEO Debra Cafaro agreed. She added that “as leaders, we do have a responsibility to figure out how to execute on the safe reopening of our businesses for everyone concerned.”
Moving forward, Cafaro noted that legislative issues such as pandemic risk insurance and some form of federal safe harbor to protect businesses that have followed Centers for Disease Control and Prevention (CDC) guidelines or other best practices as they reopen, “would be a really good building block as we start to reopen.”
Such a move would protect those businesses that are showing leadership and would encourage others to follow best practices, Cafaro said. “No one can produce 100% certainty in this environment, so providing safe harbor and some framework for pandemic risk insurance going forward would, I think, be a really important instigator for economic growth and for business confidence.”
William Bayless, Jr., CEO of American Campus Communities, Inc. (NYSE: ACC), also supported the idea of a government backstop related to liability as businesses reopen. “I don’t think any business wants to sidestep their responsibility in doing all that we can,” he said. However, he added that it’s appropriate to have protection when companies are doing all they possibly can to control the spread of contagion.
REIT CEOs on the panel also discussed when they expect to see a meaningful recovery.
Jay Brown, president and CEO of Crown Castle International Corp. (NYSE: CCI), said it will take some time for the economy to recover fully in a way “that’s going to look anything like what we saw in the fourth quarter [of 2019] and in the first quarter [of 2020].”
Brown added that the work-from-home activity, particularly in the tech and telecom space, is a longer-term cost reduction opportunity across corporate America. “That trendline is something that we as an industry broadly are going to be grappling with not just for the next two quarters but for a longer period of time as people begin to reevaluate how they interact and work.”
Like any challenge, the REIT CEOs discussed some of the lessons they have been able to learn from this unprecedented event.
Joseph Russell, Jr., CEO and president of Public Storage (NYSE: PSA), said the pandemic has created a great opportunity to reinforce the importance of doing the right thing. “That will be long-standing and hopefully it permeates well beyond anything that we’re doing internally with the company, it’s the way we’re interacting with our customers,” he said.
From a leadership standpoint, Russell added, it’s about “continuing to show the things we can do as larger companies in all the markets that we operate in.”
Brown added that watching an organization navigate the current crisis reiterates, for him, the importance of building a strong company culture when times are good so that it can sustain the organization through tougher challenges.