REITs@50: Industry Reflections, Chris Lucas of Robert W. Baird & Co.

Chris Lucas, managing director and senior REIT analyst with Robert W. Baird & Co., says NAREIT has played a vital role in the REIT industry's evolution, in large part due to its educational efforts on the capital markets side. Lucas says despite all the work that has been, that should continue to be a focus going forward.

"Investors are still under-informed about the benefits of adding REITs to their portfolio," Lucas says. "Ultimately, NAREIT's outreach efforts will benefit investors broadly and be a great service to the industry."

Lucas headed up NAREIT's research efforts from 1987 to 1997, and he says he is most proud of helping to usher in sector-level options for the NAREIT indexes.

"With the advent of the 1993 IPO boom, we were able to start breaking out the NAREIT Total Return and Equity REIT indexes in a more property-specific manner which allowed institutional investors to do comparatives to the private real estate market," Lucas says. "This really created a whole genesis for institutional investment in the marketplace."

Overall, Lucas says listed REITs have added a great deal of credibility and transparency to the commercial real estate market. In fact, this area of investment had traditionally been not very accessible to most investors and not very well understood prior to the advent of REITs, Lucas adds.

"REITs really changed the program by providing much more transparency in terms of their fundamentals as well as the real-time pricing mechanism," Lucas says.

Going forward, Lucas says listed REITs will continue to become a larger and larger liquid industry. He says as companies continue to gain share and strength in their domestic operations they will look for a global investment profile.

The 50-year history of U.S. REITs provides an institutional framework for the further globalization of the REIT model, Lucas says.

"U.S. REITs have allowed investors familiar with the REIT concept in the U.S. to feel comfortable with the concept as it has grown up in other countries," Lucas says. "It has accelerated the adoption of global investment strategies."

Lucas adds by saying he expects to see an increased number of global real estate companies going public as the REIT model proves to be the best way to own and operate commercial real estate.