Leverage Lessons Learned, REIT Privatization Specialist Says

Adam Emmerich, partner at Wachtell, Lipton, Rosen and Katz, joined REIT.com for a video interview at REITWise 2016: NAREIT’s Law, Accounting and Finance Conference at the Marriott Marquis in Washington, D.C.

Emmerich participated on a panel at REITWise that looked at privatizations in the REIT industry and the lessons learned from the last privatization wave.

Emmerich noted that one of the lessons that the investing world has learned more broadly is that leverage can be “very, very serious.”

“I don’t think we’re in any danger of falling into that trap right now,” he added, although Emmerich didn’t rule out the possibility that “overenthusiastic borrowing” could re-emerge in the future.

As for legal lessons learned, Emmerich observed that “the rules of the road are clear and have been through doctrines going back to the 1980s and before.”  

Meanwhile, Emmerich stressed the importance of REITs preparing in advance for unsolicited takeover bids or approaches from activist shareholders.

“It’s something that boards and senior management of every public company should be doing; it should be on the annual calendar,” he said.

Emmerich also highlighted proxy access as a major corporate governance issue for REITs.

“Proxy access is a huge trend in the public company sector. A number of REITs have faced proxy access proposals or adopted proxy access on a proactive basis. That will continue,” he said.