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October 6, 2014
Message from the President
 From time to time, FTSE and NAREIT, in cooperation with the FTSE NAREIT U.S. Real Estate Index Advisory Committee, review the ground rules that govern how the FTSE NAREIT U.S. Real Estate Index Series is structured, managed and maintained.
For example, in December 2010, the FTSE NAREIT All Equity REITs Index was introduced as a headline index alongside the FTSE NAREIT Equity REITs Index, and the FTSE NAREIT All Equity Timber Index was instituted as a new property sector index. More recently, the FTSE NAREIT All Equity Infrastructure Index was instituted in January 2012 as another new property sector index.
In October 2014, FTSE and NAREIT are once again seeking comment through the 2014 Market Consultation from all industry participants, including investors, analysts, REIT management and others, with respect to additional proposed changes to the ground rules intended to provide appropriate flexibility for accommodating and managing the growing number and diversity of stock exchange-listed REITs eligible for inclusion in the FTSE NAREIT U.S. Real Estate Index Series.
The proposed changes would: (1) institute a Specialty property sector; (2) change the definition of the Diversified property sector to include only those REITs owning properties in at least two sectors; (3) change the structure of the Industrial/Office property sector; (4) change the definition of the Residential property sector to include single-family housing REITs; and (5) change the definition of the Industrial/Office property sector to include data center REITs.
In addition, the Consultation also puts forward three discussion questions for further consideration regarding: (1) the further differentiation of the FTSE NAREIT Equity REITs Index from the FTSE NAREIT All Equity REITs Index; (2) the feasibility of instituting a Net Lease property sector; and (3) modification of the rules for creating new property sectors.
It is important that, as the industry evolves, so does a leading benchmark by which it is evaluated. We do not take any changes to the FTSE NAREIT U.S. Real Estate Index Series lightly, and we encourage all stakeholders to share their views on the proposed changes.
Steven A. Wechsler
President and CEO
Mortgage REIT Council Meets With Obama Administration Officials
The senior leadership of seven member firms from the NAREIT Mortgage REIT (MREIT) Council participated in meetings on Oct. 2 in Washington with officials from the executive branch.
The group met with Michael Stegman, housing counselor to Treasury Secretary Jacob Lew; Seth Wheeler, a special assistant to President Barack Obama who specializes in economic policy; and Federal Reserve Governor Jerome Powell.
Wellington Denahan, who chairs the MREIT Council and is CEO of Annaly Capital Management (NYSE: NLY), participated in the meetings. NAREIT President and CEO Steven A. Wechsler and Executive Vice President Tony Edwards also were in attendance.
(Contact: Victoria Rostow at vrostow@nareit.com)
2014 Market Consultation for FTSE NAREIT U.S. Real Estate Index Series
 FTSE and NAREIT are inviting all market participants and interested parties to participate in a consultation regarding proposed changes to the FTSE NAREIT U.S. Real Estate Index Series.
The purpose of the consultation is to allow market participants to understand and respond to a number of proposed changes and to comment with respect to a number of discussion questions. Those comments will assist FTSE and NAREIT in making any final decisions or changes to the index series.
Those interested in commenting can view the consultation document and submit a response by visiting the FTSE NAREIT Index Series webpage.
The consultation will close on Oct. 31.
(Contact: Abby McCarthy at amccarthy@nareit.com)
India Adopts REIT Regulations; Regulators Visit U.S. to Learn About REIT Experience
 On Sept. 26, the Securities and Exchange Board of India (SEBI) finalized regulations that will allow the formation both of Indian REITs (I-REITs), externally advised and managed entities that will earn mostly rents and capital gains from real estate investments, and Infrastructure Investment Trusts (InvITs), also externally advised and managed entities designed to invest in infrastructure projects.
SEBI representatives visited Washington, D.C. and New York City in late September and early October to learn more about the United States’ experience with REITs, including legal, securities, tax, financial standards and capital markets-related issues. The SEBI representatives met with NAREIT. NAREIT representatives also accompanied the SEBI delegation to meet with officials from the Internal Revenue Service and Securities and Exchange Commission.
The SEBI representatives also met with Hogan Lovells U.S. LLC, the New York Stock Exchange, Citi, RC Securities, Cohen & Steers, and NAREIT Vice Chair and Kimco Realty Corp. (NYSE: KIM) CEO David Henry.
(Contact: Tony Edwards at tedwards@nareit.com)
NAREIT Meets with FASB on Proposed Leases Standard
 NAREIT met last week with representatives of the Financial Accounting Standards Board (FASB) to discuss NAREIT’s views with regard to the proposed accounting for initial direct leasing costs.
NAREIT’s views were set forth in a July 25 letter to the FASB. As currently proposed, initial direct leasing costs would only be capitalized if they relate directly to activities that result in executed leases and would not have been incurred if the lease was not executed. Some accounting professionals interpret the language that describes the proposed accounting as not allowing the capitalization of fixed costs internal to a company, such as salary costs of a company’s leasing staff. NAREIT presented a number of points that support the continued ability to capitalize internal leasing costs related to executed leases.
Attendees representing NAREIT at the meeting included: Duke Realty Corp. (NYSE: DRE) Chairman and CEO Denny Oklak and Executive Vice President and CFO Mark Denien; Simon Property Group (NYSE: SPG) Executive Vice President and CFO Steve Sterrett and Senior Vice President and CAO Steve Broadwater; and NAREIT President and CEO Steven A. Wechsler, Executive Vice President and General Counsel Tony Edwards, and Senior Vice President for Financial Standards George Yungmann.
(Contact: George Yungmann at gyungmann@nareit.com)
NAREIT Participates in PREA Conference
 Last week, NAREIT participated in the 24th annual Institutional Investor Real Estate Conference of the Pension Real Estate Association (PREA), which currently lists more than 700 corporate members across the United States, Canada, Europe and Asia.
The conference attracted approximately 800 attendees representing pension funds, as well as their investment consultants and real estate fund managers. Panel sessions at the event focused on a number of topics, including the global economy’s influence on investment performance, real estate valuations in today’s market, opportunities in U.S. real estate, disruptive forces in real estate investing and emerging alternatives to real estate investing such as investments in other real assets.
A general session featured commentary from former NAREIT Chair Hamid Moghadam, the chairman and CEO of Prologis, Inc. (NYSE: PLD), and current NAREIT Chair Ronald Havner, the chairman, CEO and president of Public Storage (NYSE: PSA).
The PREA conference is one of the major institutional real estate investment conferences of the year. It provides an important opportunity for NAREIT, its corporate members and REIT-based real estate investment managers to meet and inform other conference attendees about the many benefits of including stock exchange-listed REITs and other publicly traded real estate companies in their portfolio allocations to real estate.
(Contact: Michael Grupe at mgrupe@nareit.com)
REIT.com Video: Quick Study with NAREIT’s Brad Case
 In the latest edition of Quick Study, Brad Case, NAREIT's senior vice president for research and industry information, offered an analysis of REIT market performance in September and year-to-date.
The total return on the FTSE NAREIT All REITs Index decreased 5.6 percent, but Case stressed that September was “a difficult month for all investors… there was no place to hide last month in investing.”
Taking a longer perspective, Case noted that since the beginning of the year, REITs have provided much greater returns than other investments. REIT returns are up more than 13 percent on the year, whereas large cap stocks have gained only 8.3 percent for the year and small cap stocks have actually lost 4.4 percent, Case observed.
CLICK HERE for more of Case's analysis on REIT.com.
(Contact: Brad Case at bcase@nareit.com)
NAREIT, EPRA Hold Investor Outreach Meetings Across Europe
 After attending the EPRA Annual Conference in London last week, Meredith Despins, NAREIT vice president for investment affairs and investor education, joined with representatives of EPRA’s research and investor outreach division for a series of 24 meetings in the United Kingdom, Switzerland, France and the Netherlands.
Briefings were conducted with a diverse group of organizations including pension funds, investment consultants, investment managers, insurance companies and private wealth managers. The total aggregated assets under management and/or advisement of these organizations represents nearly $4 trillion.
The group’s diverse series of meetings included visits with APG, PGGM, KLM Royal Dutch Airlines’ pension fund, UBS Asset Management, BNP Paribas and Allianz.
These meetings provide an opportunity for NAREIT and EPRA to jointly advocate the benefits of publicly traded real estate investment and, importantly, to leverage the research and industry perspectives of both organizations to provide a unified and coherent global perspective on the real estate investment proposition through listed REITs and real estate equities worldwide.
(Contact: Meredith Despins at mdespins@nareit.com)
NAREIT Investor Outreach Team Holds More Than 60 Meetings in September
 In September, NAREIT's Investor Outreach team held direct meetings with a diverse group of 63 investment organizations that control more than $10 trillion in assets in the institutional investment market.
The meetings were held across all targeted investment cohorts, including: 16 with several of the largest global, sovereign wealth, pension and retirement funds representing close to $800 billion in assets; eight with investment consultants with assets under advisement close to $800 billion; and 29 with investment managers that manage more than $9 trillion in assets and sponsor global and domestic products for institutional and retail investor markets. An additional 10 meetings were held with other organizations and associations active in the retirement and investment management industry.
A focus for many of the meetings continues to be research that NAREIT sponsored with Wilshire Associates on the role of U.S. REITs and global listed real estate securities within target-date funds. These are the most rapidly growing investment products in most 401(k) accounts and other tax-advantaged savings plans within the $6.1 trillion defined contribution (DC) market. The investment managers with which NAREIT met this year collectively control almost three-quarters of all target-date fund assets. Of the 154 meetings with managers thus far, 13 were with firms among the top 25 firms with respect to target-date fund assets under management.
NAREIT has also been active on the academic and institutional investment conference circuit through September of this year, attending 20 events and participating as a speaker, board member or exhibitor at nine.
(Contact: Kurt Walten at kwalten@nareit.com)
No NewsBrief Next Week
NewsBrief will not be published next week in observance of Columbus Day. The next issue will be published on Oct. 20.
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