Mike McTiernan, partner at Hogan Lovells, participated in a video interview at REITwise 2018, Nareit’s Law, Accounting & Finance Conference in Hollywood, Florida.
McTiernan has handled REIT Securities and Exchange Commission (SEC) issues both as a capital markets regulator and in the private sector. He noted that his focus in private practice is based on just a narrow client perspective. With the SEC, the focus was broader, and he had to be attuned to how his input impacted all public companies.
On the flip side, a lawyer’s focus at the SEC is on a very narrow area, such as REIT IPOs or 10-Ks. “When you come out into private practice, the breadth of what you have to worry about is unbelievable. It goes beyond securities laws. It now gets into a lot of corporate governance, you’ve got ISS, you have IR issues,” McTiernan said.
About the SEC’s guidance relating to public non-listed REITs, he noted that a lot of SEC rules haven’t been updated since 1960, whereas there have been a lot of developments in the last 30 years. This means that those who come to conferences are more attuned to the changes that are not actually in writing. “It kind of creates barriers to entry to putting out good disclosure,” according to McTiernan. SEC staff have been putting out informal guidance, and the non-traded REIT industry appreciates these efforts.
On REITs’ efforts to comply with the SEC’s pay-ratio rules, McTiernan said that REITs, since they tend to have a smaller workforce, did not have to worry about a lot of the more complex issues. However, those whose CEO salary was many times more than their median employee pay had to put in more time to address public relations issues.