REITs With a View

REIT magazine: November/December 2016

Tim NaughtonAs I begin my term as the 2017 NAREIT Chair, I’d like to take this opportunity to thank my predecessor, Ed Fritsch, for the hard work that he put in on behalf of REITs and publicly traded real estate companies in 2016. He provided thoughtful leadership in a year that saw REITs gain a significant measure of visibility in the investment marketplace thanks to the creation of a new headline sector for real estate under the Global Industry Classification Standard (GICS).

I’ve learned throughout my career in this industry that talented executives like Ed are the standard for REITs. The sound corporate governance policies built into the REIT approach to real estate investment demand that REITs seek out smart, capable people to oversee what are considered best-in-class companies.

This issue of REIT magazine profiles some of the newest additions to the ranks of REIT CEOs. As the heads of publicly traded companies, they now face rigorous oversight from regulators, analysts, investors and the media. The scrutiny is intense, but it has played a key role in the long-term success and durability of REITs.

The relationship between student housing REIT American Campus Communities (NYSE: ACC) and Arizona State University, detailed in this issue’s edition of “REITs Reshaping Communities for the Better,” further demonstrates the benefits of REIT-based real estate investment. The degree to which the public markets force REITs to operate with transparency offers peace of mind to not only investors, but potential partners as well. Institutions have confidence that when working with REITs, they have immediate access to a wealth of historical and real-time information regarding their partners’ performance and management.

REITs offer a number of benefits to investment portfolios, including dividend-based income, a track record of competitive returns, diversification and liquidity. Moreover, the transparency and governance inherent in the REIT approach to real estate investment effectively mandate that REITs operate with extraordinary discipline in terms of how they allocate their capital in full view of a wide audience of stakeholders.

As the visibility of the industry increases in the wake of Equity REITs moving into the new GICS Real Estate Sector, that aspect of REIT-based real estate investment will take on even greater importance.

I look forward to seeing all of you at REITWorld 2016: NAREIT’s Annual Convention for All Things REIT from Nov. 15-17 at the JW Marriott Phoenix Desert Ridge, where we can celebrate this exciting new era for REITs and discuss key matters in the industry today. And I’m grateful for the opportunity to play a part in helping to steer REITs toward their promising future.

Tim Naughton
Chairman & CEO
Avalon Bay Communities, Inc.

 

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