November 17, 2014
Message from the President
Last week brought the much anticipated news from MSCI Inc. and S&P Dow Jones Indices that stock exchange-listed Equity REITs and other listed real estate companies will be moved from the Financials Sector and elevated to a new headline Real Estate Sector of the Global Industry Classification Standard (GICS).
As many industry observers have noted, this decision is a major step in the continuing development of REITs and publicly traded real estate in the United States and around the world. GICS is used widely around the world to frame and structure equities-related product development, research, media coverage and much more. The simple fact is that as its own top-line sector real estate will naturally receive more focused attention from individual and institutional investors on a global basis
Importantly, as Green Street Advisors Chairman and Director of Research Mike Kirby pointed out last week, the decision by S&P and MSCI represents further recognition and validation of the REIT approach to real estate investment. Prior to the widespread growth of REITs in the U.S. and around the world, establishing portfolio positions in the real estate sector was exceedingly difficult. With the proliferation of REITs and listed real estate securities, there is greater access to real estate investment for investors of all shapes and sizes.
Over time, the elevation of real estate to a top-line GICS sector should further advance the democratization of real estate investment, enabling an increasing number of investors to benefit from the competitive returns, meaningful dividends, essential diversification and welcome transparency of REITs and publicly traded real estate companies in the U.S. and around the world.
Steven A. Wechsler
President and CEO
Real Estate Slated for New Headline Sector in GICS
Stock exchange-listed Equity REITs and other listed real estate companies will be moved from the Financials Sector and elevated to a new headline Real Estate Sector of the Global Industry Classification Standard (GICS), the leading global listed equity classification system maintained by MSCI Inc. and S&P Dow Jones Indices.
S&P Dow Jones Indices and MSCI Inc. said Nov. 10 that the creation of an 11th headline Sector of GICS, which is proposed to occur after the market closes on Aug. 31, 2016, resulted from the annual review of the GICS structure.
The two organizations noted in their Nov. 10 press release that “market feedback concerning the creation of a Real Estate Sector under GICS methodology has been very favorable.” Upon implementation, the current REITs Industry within the Financials Sector will be renamed the Equity REITs Industry within the new Real Estate Sector. Mortgage REITs will remain classified in the Financials Sector under a newly created Mortgage REITs Industry and Sub-Industry.
Earlier this year, NAREIT submitted comments to S&P and MSCI in response to their consultation request for input on the possibility of making real estate its own headline sector. Additionally, in August, a NAREIT delegation led by Equity Group Investments Chairman Sam Zell met with David Blitzer, who heads the S&P index committee, and others at S&P to discuss the proposed elevation of real estate to a headline sector. The NAREIT delegation included NAREIT Executive Vice President for Research and Investor Outreach Mike Grupe, APG Asset Management Managing Director Mary Hogan, Equity Residential (NYSE: EQR) President and CEO David Neithercut, and NAREIT President and CEO Steve Wechsler.
S&P Dow Jones and MSCI are requesting feedback on the proposed implementation date by Feb. 13, 2015, with a final decision to be announced by Mar. 13, 2015.
(Contact: Mike Grupe at email@example.com)
REIT.com Video: NAREIT Chair David Neithercut
David Neithercut, 2015 NAREIT Chair and the president and CEO of Equity Residential, talked with REIT.com at REITWorld 2014 about his objectives for the coming year. He described the current state of the REIT industry as “terrific,” noting that the absolute market cap of the REIT industry is approaching $900 billion and that the total enterprise value of the industry is approaching $2 trillion.
In terms of his goals as chair of NAREIT, Neithercut said he hopes to “continue to explain the REIT approach to real estate investing.” That entails more interaction with institutional investors to further discuss the value of investing in liquid real estate, according to Neithercut.
“There’s a lot of money out there that’s invested in real estate that would be better served by investing in the REIT model in public securities,” Neithercut commented.
CLICK HERE to view the interview with Neithercut in its entirety.
Correction: The previous edition of NewsBrief included an incorrect link to the video referenced in this article.
(Contact: Matt Bechard at firstname.lastname@example.org)
NAREIT Joins Group Calling on House of Representatives to Pass “e-Fairness” Legislation
With the current session of Congress coming to a close, NAREIT joined a coalition of hundreds of businesses and industry groups last week to urge Speaker of the House John Boehner (R-OH) to pass “e-fairness” legislation in 2014.
In a letter to Boehner last week, the organizations asked the House to take “immediate action” on an e-fairness bill that would "level the playing field" between online and brick-and-mortar retailers when it comes to the collection of sales taxes.
"Today’s marketplace needs a modern sales tax collection system to reflect reality," the groups wrote.
(Contact: Dara Bernstein at email@example.com)
REIT.com Videos: CEO Spotlight
REIT.com conducted dozens of video interviews with REIT CEOs at REITWorld 2014. Here is a sample of the latest CEO Spotlight videos now available at REIT.com.
Michael Glimcher, chairman and CEO of Glimcher Realty Trust (NYSE: GRT), discussed his company’s merger with Washington Prime Group Inc. (NYSE: WPG).
Glimcher will be CEO of the merged firm, which will be known as WP Glimcher (WPG).
“I feel really good about the deal that I made for Glimcher shareholders,” Glimcher said.
CLICK HERE to view the interview with Glimcher in its entirety.
John Case, president and CEO of Realty Income Corp. (NYSE: O), explained how the company’s portfolio appeals to the demographic force of the baby boomer generation. Two of Realty Income’s biggest tenants are club stores and dollar stores, which offer affordable products geared toward consumers who live on fixed incomes, Case said. Realty Income’s third-largest tenant category is drug stores, a sector that is actively used by the baby boomer generation.
CLICK HERE to view the interview with Case in its entirety.
Roger Waesche Jr., president and CEO of Corporate Office Properties Trust (NYSE: COPT), discussed how the company is continuing to shift the composition of its portfolio away from suburban office properties towards government tenants in the defense and information technology sectors. Looking ahead, Waesche discussed some potentially influential macroeconomic factors for his company in the coming year.
“We’re in the jobs business,” he said. “We do think, based on our view of the market, that job growth is finally getting some traction.”
CLICK HERE to view the interview with Waesche in its entirety.
(Contact: Matt Bechard at firstname.lastname@example.org)
Discussion Tied to TRIA Extension Continues
As work continues on Capitol Hill to extend the Terrorism Risk Insurance Act (TRIA) before it expires at the end of the year, NAREIT and its partners in the Coalition to Insure Against Terrorism (CIAT) are actively spreading the message about how vital it is that Congress takes action.
Host Hotels & Resorts (NYSE: HST) President and CEO Ed Walter, a former NAREIT chair, wrote an op-ed last week for The Washington Times calling on Congress to renew TRIA to prevent economic crisis in the event of a major terrorist attack. "During the fourth quarter of 2001 and much of 2002, the lack of terrorism-risk coverage cost 300,000 jobs, canceled or delayed more than $15 billion in real estate transactions in 17 states, and caused a six-year low in commercial construction," Walter wrote.
In addition, CIAT launched an ad campaign targeting key inside-the-Beltway publications. The campaign started with a pop-up ad in the transportation policy section of The Hill’s website and placement on the Washington Post’s mobile site. In just two days those two efforts generated 90,000 views and roughly 1,000 visits to the CIAT website.
This week, CIAT ads will saturate Politico’s online finance section and the homepage of National Journal. In addition, the first advertisement in this week’s National Journal print edition will be a CIAT ad. After Thanksgiving, CIAT will do another Politico sponsorship and print ad in National Journal.
(Contact: Robert Pfleiger at email@example.com)
Member Input Wanted for NAREIT Website
As part of the ongoing efforts to make NAREIT’s REIT.com the best and most comprehensive online resource for all things REIT, we recently began a usability study to determine how users interact with and navigate through the website. The usability study centers around targeted audience segments (retail investors, financial advisors and members) performing a series of tasks on the site while a moderator monitors how easily or effectively they achieved the intended result.
In addition, the usability study includes a “card sort” task that prompts participants to organize a series of keywords and topics into the most logical groupings. The intent is to use this information to ensure that content on REIT.com is organized in the most intuitive way and facilitates the most successful user experience.
This is where we are asking for broader member input. We would like any interested member to complete an online version of the “card sort.” There are 40 terms in the card sort that we are asking members to organize in the most logical way. The whole task should take no longer than 10 to 15 minutes to complete and there are no wrong answers. By participating you can help us shape the navigation and organization of REIT.com. CLICK HERE to begin. The process is anonymous; simply enter your initials in the P# field on the start page.
REIT.com is intended to serve as a vital resource for NAREIT's members as well as a tool that can be shared with REITs' stakeholders. We appreciate your feedback in making it the most effective resource possible.
(Contact: Kyle Gustafson at firstname.lastname@example.org)
REIT.com Videos: Market Insights
REIT.com conducted video interviews with REIT investors, bankers, analysts and industry stakeholders at REITWorld 2014. Here is a sample of the latest ones now available at REIT.com.
Mary Hogan, managing director at APG Asset Management, said the performance of the entire REIT industry has exceeded her already bullish expectations. In terms of the major stories in the REIT market that Hogan will be monitoring next year, she singled out mergers and acquisitions. “We’ve seen a strong private bid from sovereign wealth funds, other pension funds and private equity firms” for real estate assets in the United States, she said.
CLICK HERE to view the interview with Hogan in its entirety.
Mark Streeter, managing director at JP Morgan Chase, said he is keeping an eye on interest rates heading into 2015, when they are projected to rise. He pointed out that announcements of shifts in monetary policy have created volatility in the REIT market, most recently in 2013 when the Federal Reserve announced its plans for tapering.
“We’re not worried about interest rates, per se, in terms of what it means for the economy, because the news is actually good,” Streeter said.
“If interest rates are rising, it probably means that economic activity is improving, cash flow is improving at the property level. That’s all good" for REITs, Streeter said.
CLICK HERE to view the interview with Streeter in its entirety.
(Contact: Matt Bechard at email@example.com)
MIPIM JAPAN 2015 to be Held in May
The Association for Real Estate Securitization (ARES) is scheduled to hold MIPIM JAPAN 2015 from May 20-21 in Tokyo at the Prince Park Tower Hotel.
The event will focus on introducing urban development projects in Japan and other Asian countries and Japan’s prominent technologies for urban development, such as smart cities. Additionally, the program will look at Japanese real estate financial markets.
ARES is one of NAREIT's partners in the Real Estate Equitization and Securitization Alliance.
(Contact: Bonnie Gottlieb at firstname.lastname@example.org)
NAREIT Spreads Word about Important CEM Study
To promote the NAREIT-sponsored CEM Benchmarking Asset Allocation and Fund Performance research, NAREIT has launched a targeted online marketing campaign designed to create greater visibility for the research and its core findings demonstrating outperformance by REITs.
This campaign combines banner advertising, search engine marketing and a three-month promotion of the CEM Benchmarking research report.
Banner ads are running on PIonline.com (home of Pensions & Investments) and ai-CIO.com (home of Chief Investment Officer magazine). Each site will serve over 100,000 banner ad impressions over the course of the five week campaign. In addition, NAREIT secured high-impact “welcome ads” - large ads served to each visitor when they arrive at the site.
On InstitutionalInvestor.com, the CEM research report is being promoted as a featured white paper. The research report will be promoted for three months via e-mail, e-newsletter and social media promotions sent to Institutional Investor magazine’s 55,000 registrants and subscribers.
To supplement these efforts and expand the campaign’s reach, NAREIT is also running a search engine advertising campaign on Google. This campaign is expected to produce more than 1 million ad impressions and drive approximately 3,000 visitors to the page on REIT.com featuring the CEM research.
(Contact: Ron Kuykendall at email@example.com)
NAREIT Welcomes New Corporate Member
NAREIT is pleased to welcome Strategic Realty Trust as its newest Corporate Member.
Strategic Realty Trust is a public, non-listed Equity REIT that owns a portfolio of 16 grocery-anchored shopping centers containing approximately 1.6 million square feet across the United States. Based in San Mateo, Calif., Strategic Realty Trust’s chairman is Todd Spitzer and its president and CEO is Andrew Batinovich.
(Contact: Bonnie Gottlieb at firstname.lastname@example.org)
NAREIT® is the worldwide representative voice for REITs and publicly traded real estate companies with an interest in U.S. real estate and capital markets. Members are REITs and other businesses that own, operate and manage income-producing real estate, as well as those firms and individuals who advise, study and service those businesses. NAREIT is the exclusive registered trademark of the National Association of Real Estate Investment Trusts, Inc.®, 1875 I St., NW, Suite 600, Washington, DC 20006-5413. Follow us on REIT.com.
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This information is solely educational in nature and is not intended by NAREIT to serve as the primary basis for any investment decision. NAREIT is not acting as an investment adviser, investment fiduciary, broker, dealer or other market participant, and no offer or solicitation to buy or sell any security or real estate investment is being made. Investments and solicitations for investment must be made directly through an agent, employee or representative of a particular investment or fund and cannot be made through NAREIT. NAREIT does not allow any agent, employee or representative to personally solicit any investment or accept any monies to be invested in a particular security or real estate investment.
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