March 2, 2015
Message from the President
The Washington Leadership Forum (WLF) has long been a core component of NAREIT’s political outreach program. More than 50 REIT industry leaders braved snow and frigid temperatures to travel to Washington last week for the 18th annual event.
Every year, WLF brings the top executives of the REIT industry together with elected representatives in Congress. In 48 meetings with members of Congress this year, REIT CEOs stressed the central role played by the industry in the functioning of the national economy, noting that the REIT approach to real estate investment effectively and efficiently directs capital into the real estate sector.
Additionally, they emphasized to policymakers that REITs enhance wealth creation and boost retirement savings through competitive performance, consistent dividends, strong corporate governance, liquidity and portfolio diversification.
Key topics of discussion in the meetings included: REIT-based real estate investment in the context of tax reform; reforming the Foreign Investment in Real Property Tax Act (FIRPTA) to bring down barriers to equity investment in U.S. REITs; and leveling the playing field between brick-and-mortar and online retailers through the Marketplace Fairness Act to bring fairness to sales and use tax collection.
NAREIT thanks all of the CEOs who gave of their time and energy to participate in this year’s event and looks forward to another successful WLF in 2016.
Steven A. Wechsler
President and CEO
REIT Leaders on Capitol Hill
The more than 50 REIT industry leaders in attendance at last week’s 18th annual Washington Leadership Forum (WLF) met with key policymakers in Congress, including a number of longtime supporters of the REIT approach to real estate investment. NAREIT members discussed key policies crucial to the REIT industry with legislators during the forum, which was held on Feb. 24-25.
Speaker of the House John Boehner (R-OH), Senate Majority Leader Mitch McConnell (R-KY) and House Democratic Leader Nancy Pelosi (D-CA) were among the lawmakers who met NAREIT members at this year's event.
REIT Leaders on Capitol Hill: Senate Finance Committee Ranking Democrat Ron Wyden (D-OR) spoke at a fundraiser at the Hay Adams hotel on Feb. 24.
REIT Leaders on Capitol Hill: Senate Finance Committee Chairman Orrin Hatch (R-UT) addressed WLF attendees at breakfast on Feb. 25.
REIT Leaders on Capitol Hill (from left to right): Steve Wechsler, NAREIT president and CEO; Michael Glimcher, vice chairman and CEO of WP GLIMCHER (NYSE: WPG); House Democratic Leader Nancy Pelosi (D-CA); Jay Leupp, managing director with Lazard Asset Management; Drew Alexander, president and CEO of Weingarten Realty Investors (NYSE: WRI).
REIT Leaders on Capitol Hill (from left to right): Ed Fritsch, president and CEO of Highwoods Properties, Inc. (NYSE: HIW) and NAREIT second vice chair; Glimcher; Rep. Rob Portman (R-OH); David Neithercut, president and CEO of Equity Residential (NYSE: EQR) and NAREIT chair; Doug Donatelli, chairman and CEO of First Potomac Realty Trust (NYSE: FPO).
REIT Leaders on Capitol Hill (from left to right): Timothy J. Naughton, chairman and CEO of AvalonBay Communities, Inc. (NYSE: AVB) and NAREIT treasurer; Ron Havner, chairman, president and CEO of Public Storage (NYSE: PSA); Wechsler; Glimcher; House Majority Leader Kevin McCarthy (R-CA); Sam Zell, founder and chairman of Equity Group Investments; Neithercut.
REIT Leaders on Capitol Hill (from left to right): David Henry, vice chairman and CEO of Kimco Realty Corp. (NYSE: KIM) and NAREIT first vice chair; Rep. Peter Roskam (R-IL); Ed Walter, president and CEO of Host Hotels & Resorts, Inc. (NYSE: HST); Dan Wagner, senior vice president of government relations at The Inland Real Estate Group of Companies, Inc.
(Contact: Tony Edwards at email@example.com)
Brady Receives Small Investor Empowerment Award
Feb. 24, 2015: Rep. Kevin Brady (R-TX), left, receives the 2015 Small Investor Empowerment Award from David Neithercut, NAREIT’s 2015 chair and the president and CEO of Equity Residential. The Small Investor Empowerment Award was established on behalf of those people who invest in, are employed by, or derive other benefits from REITs and publicly traded real estate companies. The award recognizes public servants who have demonstrated exceptional commitment to the ideals of free enterprise, economic growth, personal freedom and unlimited opportunity for all Americans.
(Contact: Tony Edwards at firstname.lastname@example.org)
NAREIT Investor Outreach Team Active in February
In February, NAREIT's Investor Outreach team met with a diverse group of 40 global investment organizations controlling more than $5.6 trillion in institutional investment assets.
The meetings were held with organizations across all targeted investment cohorts, including nine with prominent domestic pension plans; three with investment consultants; 21 with investment managers sponsoring global and domestic products for the institutional and retail investor markets; and seven meetings with other organizations and associations active in the pension and retirement industry.
NAREIT's Investor Outreach team is a resource for the U.S. pension and endowment plan industry, providing information to assist investors in determining effective ways to use listed Equity REITs in their portfolios. Defined benefit pension plans comprise a large and highly concentrated segment of the $22.0 trillion U.S. pension and retirement market, with total assets of $6.5 trillion at the end of the third quarter of 2014.
More than half of these plans, on an asset weighted basis, now report real estate investments in stock exchange-listed REITs. When combined, the number of pension plans, endowments and foundations reporting REIT-based real estate investments increased 22 percent in 2014. Further, data compiled by Citi Research reveal that nearly 25 percent of total listed U.S. REIT equity market cap is held by pension funds, endowments and foundations, providing evidence of the central role traditional pension funds and other institutional investors play in the listed U.S. REIT industry today.
NAREIT has also been active on the academic and institutional investment conference circuit during February, attending one event, participating as a speaker at one event, and participating as a board member at one event.
(Contact: Meredith Despins at email@example.com)
FASB Provides Lessors with Transition Relief for Initial Direct Leasing Costs
On Feb. 25, NAREIT observed a meeting of the Financial Accounting Standards Board (FASB) in Norwalk, Conn., on the Leases Project. Among the topics discussed was transition for the new Leases standard. The board typically favors comparability of financial reporting before and after the effective date of new financial standards, thereby requiring companies to retroactively restate comparative periods presented in the financial statements. However, at the meeting, the Board decided to require a modified retrospective transition method (with specified reliefs) for existing operating leases.
Of particular interest to Equity REITs was the relief that the FASB afforded with respect to initial direct leasing costs. Previously, the board decided that initial direct leasing costs would be expensed as incurred, which would represent a significant change in current practice. However, in order to alleviate the burden for companies that currently capitalize these costs, the Board decided that lessors would not be required to reassess initial direct leasing costs for any existing leases. Thus, companies would be able to continue to amortize any initial direct leasing costs that were previously capitalized and amortized prior to the effective date of the new standard. This transition relief avoids writing off the remaining unamortized balance of leasing costs previously deferred upon adoption.
At the current time, the board has not established an effective date for the new standard.
Additionally, on Feb. 18, the FASB issued Accounting Standards Update Consolidations (Topic 810): Amendments to Consolidations Guidance. The final standard amends the consolidation guidance for variable interest entities (VIEs) and voting interest entities.
In so doing, the FASB mandates the application of consolidation guidance to investment companies, which had previously been indefinitely deferred.
CLICK HERE for more information on the FASB’s latest actions.
(Contact: Chris Drula at firstname.lastname@example.org)
NAREIT Backs Bill Requiring Detailed Study of FAA's Proposed Changes to Navigable Airspace
NAREIT and a coalition of industry organizations wrote to the leadership of the House Committee on Transportation and Infrastructure last week calling for the passage of legislation (H.R. 365) to require the Federal Aviation Administration (FAA) to follow ordinary notice and comment procedures before implementing a proposed policy change related to navigable airspace.
The FAA is proposing to change its criteria for determining potential hazards to navigable airspace. NAREIT and its coalition partners are concerned, however, that the proposal may have far-reaching impacts on owners of properties near airports. "Our paramount concerns are the safety of airline passengers, building occupants and neighborhoods near airports," the letter stated.
(Contact: Kirk Freeman at email@example.com)
NAREIT’s Despins Participates in PAPERS Meeting
Meredith Despins, NAREIT vice president for investment affairs and investor outreach, last week participated in a meeting of the board of directors/corporate advisory board of the Pennsylvania Association of Public Pension Employees Retirement Systems (PAPERS) in Harrisburg, Pa.
PAPERS facilitates the education of its membership in all matters related to their duties as fiduciaries overseeing the assets of the public employee retirement systems in the state. Participating members include public pension plans, public agencies, authorities, boards and commissions that have regulatory supervision, oversight and administrative responsibility for public pension funds in Pennsylvania. Collectively, these members represent the interests of more than half a million public employees and retirees with combined total pension fund assets of more than $90 billion.
The corporate advisory board is selected from PAPERS membership and consists of professionals from investment management, investment consulting and asset servicing organizations.
(Contact: Meredith Despins at firstname.lastname@example.org)