February 6, 2012
Message from the President
Last week's Republican presidential primary and caucuses, coupled with the prior week's presidential debates and State of the Union Address, have placed a spotlight on election year politics. Political discussion clearly will occupy center stage for the balance of 2012.
NAREIT is an active and ongoing participant in the political process, representing the REIT and publicly traded real estate industry before all of our policymaker audiences in Washington. Our outreach to elected representatives in Congress is very much bipartisan, reflecting the fundamental nature of REITs and real estate investment – a fact that is equally well represented in the contributions of our industry's political action committee, REITPAC.
As the story in this issue of NewsBrief reports, REITPAC's contributions go to Members of Congress on both sides of the aisle. REITPAC seeks to support candidates who promote policies conducive to furthering the REIT approach to real estate investment.
Through REITPAC, the REIT and publicly traded real estate industry stands together to carry its message to Capitol Hill. Especially in an election year, when organizations representing every imaginable interest are vying for the attention of elected officials, it is essential that our industry speak with a strong, clearly understandable voice. REITPAC helps ensure that voice is clear, and is heard.
Steven A. Wechsler
President and CEO
Record-Setting Year for REITPAC
REITPAC, NAREIT's political action committee (PAC), raised an historic level of contributions from NAREIT member company employees in 2011.
Contributions to REITPAC increased more than 16 percent from 2010. REITPAC contributions in 2011 totaled $913,576, a significant increase from the 2010 REITPAC contributions of $784,671. The increase in REITPAC contributions was the result of strong support from NAREIT member company employees and the leadership of 2011 REITPAC Chair, Don Wood, president and CEO, Federal Realty Investment Trust (NYSE: FRT).
As always, REITPAC disbursements in 2011 were made in bipartisan fashion, with 55 percent going to Republican candidates and 45 percent going to Democrats.
As we enter into the full swing of an election year, REITPAC dollars will become even more vital to the REIT industry. REITPAC was created to maximize the political impact of the REIT industry on Capitol Hill. It is the only PAC in the country dedicated solely to the variety of issues that affect REITs and publicly traded real estate on a daily basis.
(Contact: Leah Cohen at firstname.lastname@example.org)
Investor Outreach Team Closes January with Busy Week in the Golden State
The year has gotten off to a busy start for NAREIT's Investor Outreach team, which met with the nation's largest investment consultant and investment manager in January. During the week of Jan. 20 alone, NAREIT held seven meetings across California. Meetings were held with a pension and retirement plan sponsor, three investment consultants, and three investment managers that, in the aggregate, control close to $8 trillion in assets.
The principal purpose of the California meetings was to communicate the latest research NAREIT has conducted with Wilshire Associates on the role of REITs within target-date funds, the fastest-growing investment product in the defined contribution market, including the 401(k) market. A key excerpt of the Wilshire study states: "This analysis supports the case that the target-date fund glide path for future retirees should include a meaningful allocation to the commercial real estate asset class through U.S. or global listed REITs and real estate equities in the range of five percent to 18 percent."
Interestingly, one of the investment managers with which we met includes a REIT allocation of up to 15 percent within its recommended target-date fund asset allocation.
During the month, meetings were held with 22 organizations across all targeted investment cohorts, including: three with prominent domestic and international pension, retirement, and sovereign wealth fund plan sponsors representing more than $135 billion in assets; three with investment consultants with assets under advisement of more than $6 trillion; and 15 with investment managers representing close to $9 trillion of assets under management and sponsoring global and domestic products for the institutional and retail investor market.
(Contact: Kurt Walten at email@example.com)
REIT.com Video: Brad Case, NAREIT
The FTSE NAREIT All REITs Total Returns Index climbed nearly 6.5 percent in January. REITs bested the S&P 500 by two percentage points for the month.
Brad Case, NAREIT senior vice president of research and industry information, discussed the REIT market's performance in the first month of the year. Case attributed part of REITs' outperformance to strong relative dividend yields.
"One of the big differences between REITs and the total returns of the stock market is that so much of the returns come from income and dividends," Case said. "Investors are looking for dividend yields and investments that will provide them with the income they need to pay their expenses. Certainly, investors are very happy with the dividends they get from their REIT investments."
In terms of share-price appreciation, Case noted that an estimated $100 billion in debt on real estate assets are coming due during 2012. Most of these debts were assumed at the peak of the market in 2007 by investors other than REITs, according to Case.
"Many of those investment managers are going to have trouble repaying those debts," he said. "REITs, because they have a competitive advantage in terms of access to capital, are in a position to buy those properties at good prices. So, I think investors are looking forward to the prospects of increasing earnings, not just from the improvement in the economy, but also from the fact that REITs can buy properties at good prices."
As fears of even more economic turbulence continue to subside, the outlook is starting to brighten up in the lodging sector. The sector gained 10.9 percent in January.
"I think that's a pretty good illustration of what I was just talking about, the easing of concerns about the economic recovery," Case said. "When investors have a lot of concerns about the strength of the recovery and about whether we might go into another recession, lodging REITs tend to suffer in that kind of situation, because investors aren't sure if they're going to be able to fill their rooms with vacation travelers or business travelers."
(Contact: Matt Bechard at firstname.lastname@example.org)
NAREIT Calls on Senators to Take Up Marketplace Fairness Act
NAREIT cosigned two letters sent to the Senate last week related to the Marketplace Fairness Act (S. 1832).
One letter, addressed to Senate Finance Committee Chairman Max Baucus (D-MT) and Ranking Minority Member Orrin Hatch (R-UT), called for a hearing on the bill. The second letter was sent to 88 members of the Senate requesting that they co-sponsor the Marketplace Fairness Act.
(Contact: Robert Dibblee at email@example.com)
NAREIT Welcomes New Member
NAREIT welcomes Terreno Realty Corporation (NYSE: TRNO) as its latest Corporate Member. Terreno Realty Corporation acquires, owns and operates industrial real estate solely in six coastal U.S. markets (the metropolitan areas of Los Angeles, Northern New Jersey/New York City, San Francisco Bay Area, Seattle, Miami, and Washington D.C./Baltimore). Based in San Francisco, the company's chairman and CEO is W. Blake Baird and its president and CFO is Michael Coke. Baird and Coke, formerly with AMB Property Corporation, co-founded the company in 2009.
(Contact: Bonnie Gottlieb at firstname.lastname@example.org)
Who's Going to Hollywood?
REITWise 2012®: NAREIT's Law, Accounting & Finance Conference® brings together REIT executives and leading service providers that support their legal, financial and accounting needs. Registration is now available online for this important event, which will be held March 21 to 23 in Hollywood, Fla.
More than 40 sessions, roundtables and events provide attendees with many opportunities to hear the latest legal, financial and accounting insights concerning capital markets, financial standards, global investment opportunities, SEC policies, tax updates and more. The breadth of the REITWise educational program provides attendees the opportunity to earn up to 22 hours of CPE credits or 18 hours of CLE credits.
In addition to core sessions of interest, like SEC and Financial Standards Developments, Tax Planning for U.S. REITs Investing Abroad, The Treasury Speaks, and State of the Commercial Real Estate Markets, REITWise offers valuable roundtable sessions lead by engaging moderators. Roundtables include:
Cash Management/Treasury Best Practices
General Counsel Issues
Latest in Information Technology
Alternative Work Arrangements
Visit the REITWise 2012 home page
for complete event information and online registration.
(Contact: Katelyn Rowland
NAREIT Presents Real Investment Fundamentals Workshop in Arizona
Meredith Despins, NAREIT vice president of investment affairs and investor education, Glenn Mueller, professor at the University of Denver / Daniels School of Business, and James Valente, Director of Performance and Risk Analytics at Investment Property Databank, LTD (IPD) jointly presented an executive educational workshop titled "Real Estate Investing Fundamentals" this week in Arizona. The workshop was offered in conjunction with Institutional Real Estate Inc.'s annual "Visions, Insights & Perspectives 2012 – The Education and Networking Conference for Institutional Real Estate Investors" (VIP 2012).
The workshop provided pension and retirement fund trustees, their investment staff, and other professionals from the investment consulting and investment management community with a comprehensive primer on the commercial real estate investment opportunity.
Despins led the workshop's REIT investment module, providing an industry overview, a review of REIT key investment characteristics, and commentary on how pension and retirement plan sponsors are using REITs within their defined benefit and defined contribution plan investment portfolios. Pointing to NAREIT internal and sponsored research findings, Ms. Despins highlighted several noteworthy trends, including increased allocations to REITs within asset allocation products designed for the defined contribution market; how having meaningful exposure to listed REITs within a private equity real estate portfolio is an important way of mitigating downside portfolio risk – while creating additional opportunity for return enhancement within defined benefit plans; and finally, how listed real estate provides plan sponsors with an efficient and economic way to gain global real estate exposure.
The conference was attended by nearly 400 delegates.
(Contact: Meredith Despins at email@example.com)