REIT Boards Facing New Challenges from COVID Crisis

Keith Townsend, partner at King & Spalding, participated in a video interview filmed in conjunction with Nareit’s REITworks: 2020 Virtual Conference.

Townsend said REIT boards are facing a wide range of near-term and longer-term challenges and risks as a result of the pandemic.

Some of the longer-term issues boards are mulling include employee and tenant safety, leverage levels, joint venture strategies, compensation targets that were set pre-COVID, dividends, and investor activism.

The response to these various challenges depends on each asset class, according to Townsend. However, “all REIT boards are struggling with the potential of permanency of some of these challenges,” he noted.

As to whether boards have the right skill set in place to handle the new demands, Townsend observed that “most REIT boards have done a nice job of creating a skill set matrix that was responsive to what their business looked like before the pandemic. Those skill set matrices will evolve as a result of the pandemic.”

However, Townsend added that the bigger driver of change in REIT boardrooms will be a greater focus on diversity and inclusion.