REITs Must Be Proactive as Shareholder Activism on the Rise, Capital Markets Lawyer Says

Keith Townsend, partner at King & Spaulding, participated in a video interview at Nareit’s REITwise: 2018 Law, Accounting & Finance Conference in Hollywood, Florida.

Townsend has seen a significant rise in shareholder activism in the REIT sector in recent years. “REITs are no longer impervious and they are going to have to be ready with their advisors for these campaigns to occur,” Townsend said.

REITs need to be aware that they are vulnerable and go through some kind of “Blackhat analysis” and be prepared to counteract any thesis activists might come up with, Townsend said. Considering that institutional investors have become more empathetic to REIT activist investors’ positions, this has resulted in REIT CEO changes, share buybacks, mergers and acquisitions (M&A) activity, divestitures and major corporate governance changes.

Townsend doesn’t see these sorts of fallouts going away. Thus, for REITs, the best course is to avoid such outcomes in the first place. Companies have taken to using proxy statements as advocacy documents, for instance, and taking a broader view, according to Townsend.