Growth of REIT Industry Helping Attract Activists, Menna Says

Gil Menna, a co-chair of the REITs and real estate mergers and acquisitions practice at Goodwin Procter, joined for a video interview at REITWise 2017: NAREIT’s Law, Accounting & Finance Conference in La Quinta, California.

Menna participated in a REITWise panel discussion on activist investors. He noted that capital flows have been a prime reason for a pick-up in activity.

“There’s a lot of capital allocated to activist activities, and the REIT industry is growing… so it provides a likely target,” he said.

Menna noted that 15 percent of total corporate activist campaigns in 2016 were targeted toward the real estate industry.  He acknowledged that while there have been some positive benefits from activism, such cases are the exception to the rule in the REIT industry because REITs already provide a high level of information. Activist investors are unlikely to be able to obtain additional or alternative information, Menna said.

Meanwhile, Menna observed that if the economy doesn’t grow as expected in 2017, REITs could benefit from investors taking a defensive stance. If the economy does advance, REITs are likely to increase their earnings guidance based on gains in net operating income (NOI), he said.