The Durability of the REIT Approach to Real Estate Investment

9/18/2017 | By Tim Naughton

Published in the September/October 2017 issue of REIT magazine.

As my term as 2017 NAREIT Chair draws to a close, I’m finding that my experiences in the past year have done nothing but reinforce my confidence in the durability of the REIT approach to real estate investment.

That starts with the quality of the management teams across the industry. We see their acumen on display every day through their leadership of best-in-class real estate companies. My role as Chair has given me an even greater appreciation for the thoughtful insight these executives bring to broader conversations about financial markets, public policy and more.

Our dynamic and increasingly global economy rewards wisdom, foresight and prudent leadership at the head of any company in any industry. Fortunately, those qualities don’t come in short supply among NAREIT’s members.

My admiration doesn’t end at the C-suite, though. The depth of talent executing on the visions laid out by these management teams plays a vital role in ensuring the success of REITs as they support how people around the world live, work and play.

The capabilities of the people who make up our industry have undoubtedly contributed to REITs’ track record of solid financial returns to investors. They’ve also played a part in the growing recognition of REITs and real estate as a fundamental element of diversified investment portfolios. We saw tangible evidence of this in 2016 with the elevation of real estate to its own sector under the Global Industry Classification Standard (GICS) by S&P Dow Jones Indices and MSCI.

This year brought more gratifying developments in the investment community. Importantly, investment firm Vanguard, the largest REIT investor in the world, is seeking shareholder approval to change the benchmark for its REIT index funds, meaning that the funds would invest in a broader range of REITs and publicly traded real estate companies. More REITs are joining the ranks of major stock market indexes such as the S&P 500 as well.

Since REITs were introduced in the United States nearly 60 years ago, NAREIT has been instrumental in preserving, perfecting and promoting the REIT approach to real estate investment. NAREIT represents REITs in the policymaking process on all levels, but it also helps tell our story to investors, financial analysts, the media and the broader public. As the global economy evolves, NAREIT provides instructive analysis and insight as to where REITs have been and where they are headed. It also creates the spaces for collaboration and thought leadership among its members that are necessary to address key issues facing REITs and real estate investment.

I’m deeply grateful for the opportunity I’ve had to serve the REIT community as 2017 NAREIT Chair and would like to thank CEO Steve Wechsler and the NAREIT staff for all of their hard work in the last year. Moreover, I want to express my gratitude to NAREIT’s members as a whole for all of their support. Working together through NAREIT helps ensure that REITs will remain vibrant and effective building blocks of the economy for years to come.

I look forward to seeing all of you in Dallas at REITWorld 2017.

Tim Naughton
Chairman & CEO
AvalonBay Communities, Inc.

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