REIT Governance Specialist Says Valuation Estimates Spurring Activism

Jim Hanks, a partner at Venable LLP, joined REIT.com for a video interview at REITWise 2017: NAREIT’s Law, Accounting & Finance Conference in La Quinta, California.

Hanks commented on some of the factors spurring shareholder activism. According to Hanks, those factors include a growing tendency on the part of analysts and others to “purport to be able to value REITs on the basis of the net asset value (NAV) of their underlying real estate.”

Meanwhile, Hanks recommended that REITs take a wait-and-see approach to those shareholders who are demanding that REITs give up the board’s right under Maryland law to have exclusive power to amend its byelaws.

“It’s still very early in this issue,” Hanks said.

Looking forward, Hanks commented that continued and enhanced shareholder engagement is the best corporate governance practice for REITs to focus on.

“That is proving to be a very fruitful path for REITs and for all companies generally. Talk to your shareholders,” he observed.