REITs@50: Industry Reflections, Gil Menna of Goodwin Procter LLP

Gil Menna, partner with Goodwin Procter LLP, says over the past 50 years NAREIT has effectively promoted best practices for the REIT management teams to follow. In addition, Menna says NAREIT has worked effectively with Congress to modernize the REIT vehicle.

Because of their comparatively low leverage, Menna says listed REITs have been a positive force in the commercial real estate industry.

"REITs have reduced the volatility of real estate as an asset class," Menna says. "Private investors often wind up chasing large amounts of debt, but the REIT industry is historically more careful with respect to its use of debt."

Menna says the internalization of management established by the Tax Reform Act of 1986 was the most important event in the REIT industry's development.

"Today, the most premiere real estate investment trusts are internalized owners, operators, developers with no conflicts of interests with external advisors," Menna says.

Menna says the amount of equity capital REITs were able to raise amidst the credit crisis and Great Recession has certainly garnered attention today, but he thinks it deserves to be remembered as a key moment going forward.

"It is still quite remarkable to me after going through the Great Recession and watching its effect on the real estate industry that the REIT was able to preserve cash and also begin to raise significant amounts of equity capital," Menna says.

Going forward, Menna says he expects the industry to remain vibrant with stellar companies. Menna adds that he expects a new wave of companies to enter the REIT space to take their place among the current crop of industry leaders.

"Today, the industry is full of stars," Menna says. "I think tomorrow it will be full of new stars."