REITs@50: Industry Reflections, Steven Roth of Vornado Realty Trust

Steven Roth, chairman of Vornado Realty Trust (NYSE: VNO), served as NAREIT Chair during the Sept. 11 terrorist attacks on America. While it was a very challenging time for the industry and country as a whole, Roth says it was galvanizing moment as well.

"The most important imperative at that time was terrorism insurance," Roth says. Through the efforts of NAREIT and other organizations in the Coalition to Insure Against Terrorism, the Terrorism Risk Insurance Act was passed which made comprehensive terrorism risk insurance coverage available and affordable. "We needed terrorism insurance to be able to get financing. It was my honor to be head of NAREIT at the time. It was exciting and we were able to get the job done."

Roth says that is just one example of NAREIT's importance to the REIT industry.

"The organization is really the glue of the REIT industry," Roth says. "It is the networking hub and the thought hub. NAREIT is the public face of all the REITs and the chief lobbyist."

REITs are in the business of "liquid real estate," Roth says, adding that is one of the most important factors REITs have brought to the commercial real estate investment market.  

"The shares of listed REITs are much more liquid, much more tradeable, much more price transparent than the real underlying real estate. So that is an enormous advantage," Roth says.

The access to capital available to public REITs also proved an enormous benefit following the Great Recession.

"The first harbinger of a recovery was public real estate became liquid, capital markets opened up and that was a wonderful thing for listed REITs," Roth says.

Looking back on the REIT industry's history, Roth highlights the origination of REITs in 1960 and the wave of REIT IPOs in the 1990s as two key milestones.

Roth adds that he has no doubts that "REITs are for real" and that they are here to stay.

"The access to capital in the capital markets, the liquidity of being able to buy and sell shares versus buy and sell buildings, the fact that some of the best real estate in the country is held in publicly traded hands, the fact that the management teams are extensive and professional with corporate standards. All of that shows that the REIT industry is for real," Roth says.

Roth says that industry will keep growing as existing companies grow in size and new companies enter the public market.