The Beginnings of an Era

11/6/2013 | By Ronald L. Havner

Published in the November/December 2013 issue of REIT magazine.

I am pleased to have the opportunity to serve the REIT industry as NAREIT’s Chair for 2014. I will assume my new responsibilities at REITWorld 2013: NAREIT’s Annual Convention for All Things REIT, where we will celebrate a special 20-year anniversary for our industry.

Many consider 1991 to be the year in which our current Modern REIT Era got its start. In the Modern REIT Era, the REIT industry has been transformed from a relatively small group of companies heavily represented by mortgage REITs into a much larger marketplace consisting primarily of publicly traded equity REITs, with mortgage REITs and public, non-listed REITs making up a smaller part of the market.

While 1991 is a logical point to mark the start of the Modern REIT Era, there is an equally good argument to be made for 1993 as the beginning of the new era of REITs.

Advocates of both anniversary dates agree that the catalyst that triggered the dramatic change in the industry was the credit crisis that grew out of the commercial real estate market collapse of the late 1980s. The collapse destroyed the savings and loan industry and also shut down commercial real estate lending by banks and insurance companies.

With no credit available through their normal lending channels, privately held property companies took a huge step in a new direction to get the capital they needed – they went public.  Because investors were still suspicious of the commercial real estate market, the new public companies chose, in increasing numbers, to become REITs.

The UPREIT model set the stage for the transformative year of 1993, when the REIT IPO trickle turned into a flood.

Kimco Realty Corporation’s (NYSE: KIM) IPO and two others in 1991 showed the way, establishing the claim for 1991 as the new industry’s inaugural year. Those IPOs were followed in 1992 by six more, including Taubman’s – the first UPREIT.

The UPREIT model was critically important, because it set the stage for the transformative year of 1993, when the REIT IPO trickle turned into a flood. The three IPOs of 1991 and six IPOs of 1992 were followed by 45 in 1993; 43 in 1994; and another 59 through the remainder of the decade. The listed REIT industry’s equity market capitalization grew from $16 billion at the end of 1992 to $125 billion at the close of 1999.

The period of exceptional growth that began in 1993 ultimately provided the REIT industry with the scale that made it possible for all types of investors – from individuals to institutions – to invest in REITs. That pivotal year helped set the stage for REITs to move from a niche investment to a mainstream one.

Of the 45 companies that became publicly traded REITs in the banner year of 1993, 19 are currently in the FTSE NAREIT All Equity REITs Index. We will recognize them, their pioneering roles in our industry, and the continued growth of the REIT market over the past two decades at REITWorld 2013. I look forward to seeing you there.


Chairman, President & CEO
Public Storage


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