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March 7, 2011
Message from the President
 NAREIT's Washington Leadership Forum held this week was one of the most active and effective WLF events on record. The
REIT CEOs who participated took part in 53 meetings with senators, representatives and policymakers in federal agencies to build understanding of the REIT approach to real estate investment. By comparison, last year 41 meetings were held.
The discussions covered a range of topics important to our industry, including: the need for reform of the Foreign Investment in Real Property Tax Act to encourage cross-border equity investment in commercial real estate; support of the
U.S. REIT Act, which would update and streamline the REIT rules; the roles Fannie Mae and Freddie Mac currently play in the mortgage REIT and multifamily housing sectors; and the need to craft green buildings incentive programs so that we
see full participation by REITs.
The intensified, high-level outreach effort was especially important at this time as new federal tax and spending policy is being shaped. Republicans in the House of Representatives are proposing cutting $61 billion in federal spending
this year. The Obama Administration's budget also calls for spending cuts, but it clearly points to tax increases down the road, as well.
In this fluid environment, as both parties search for dollars to plug a $1.6 trillion deficit hole, NAREIT is monitoring the debate and working to build understanding of both our industry's needs and its contributions to economic growth
and job creation. As the story below reports, the participants at this year's WLF played an important role in that effort.
Steven A. Wechsler
President and CEO
REIT Leaders on the Hill
 The Washington Leadership Forum has long been a core component of NAREIT's political outreach program. The Leadership Forum
provides an excellent opportunity for leaders of NAREIT's own community to meet with leaders and key policymakers in Congress, among whose ranks are a number of longtime supporters of the REIT approach to real estate investment. This year,
NAREIT member executives met with a record 53 Congressional members, including Senate Majority Leader Harry Reid (D-NV), Senate Minority Leader Mitch McConnell (R-KY), House Majority Leader Eric Cantor (R-VA) and House Minority Whip Steny
Hoyer (D-MD).
 NAREIT members discussed key policies crucial to the REIT industry with legislators during the Forum, which was held on Mar. 1 and
Mar. 2. House Ways & Means Committee Chairman Dave Camp (R-MI) addressed the attendees as part of the program on Mar. 2. Chris Wallace, host of FOX News Sunday, was this year's dinner speaker. Former U.S. Secretary of Defense and U.S.
Senator William S. Cohen, chairman and CEO of The Cohen Group, was this year's Board of Governors guest speaker, together with Brian Deese, Deputy Director of President Obama's National Economic Council.
(Contact:
Robert Dibblee at rdibblee@nareit.com)
2011 WLF Snapshots
REITs on the Hill: NAREIT Chair and
AvalonBay Communities Inc. (NYSE: AVB) Chairman and CEO Bryce Blair (right) presents House Majority Leader Eric Cantor (R-VA) with the 2011 Small Investor Empowerment Award.
The Small Investor Empowerment Award was established by NAREIT on behalf of those people who invest in, are employed by, or derive benefit from REITs and publicly traded real estate companies. The award recognizes public servants who have
demonstrated exceptional commitment to the ideals of free enterprise, economic growth, personal freedom and unlimited opportunity for all Americans.
REITs on the Hill (from left to right): Dana Anderson, vice chairman,
Macerich (NYSE: MAC); Walt Rakowich, CEO,
ProLogis (NYSE: PLD); NAREIT President and CEO Steve Wechsler.
For the fifth year in a row, ProLogis received the 2010 REITPAC Teamwork Award. The REITPAC Teamwork Award is presented annually to the company that has the most employees who contribute to REITPAC. A total of 67 employees from ProLogis
contributed to REITPAC last year.
The 2010 REITPAC Leadership Award was awarded to Macerich. The Leadership Award is presented annually to the company that collectively raises the most money for REITPAC in a calendar year. In 2010, executives from Macerich contributed
$42,700.
REITs on the Hill (from left to right): Bob Harris, senior advisor,
Plum Creek Timber Co. (NYSE: PCL); Bryce Blair; Senate Finance Committee Chairman Max Baucus (D-MT); Steve Wechsler; Scott Winer, vice president, taxes,
Rayonier Inc. (NYSE: RYN); Ric Clark, President and CEO,
Brookfield Office Properties (NYSE: BPO).
REITs on the Hill (from left to right): Ric Clark; Steve Wechsler; Sen. Charles E. Schumer (D-NY); Michael Farrell, Chairman, President and CEO of
Annaly Capital Management Inc. (NYSE: NLY).
REITs on the Hill (from left to right): David Henry, president and CEO,
Kimco Realty Corp. (NYSE: KIM); Don Wood, president and CEO,
Federal Realty Investment Trust (NYSE: FRT); Craig Macnab, CEO,
National Retail Properties Inc. (NYSE: NNN); House Minority Whip Steny Hoyer (D-MD); Dara Bernstein, NAREIT senior tax counsel; David Stanford, executive managing director, RealFoundations.
REITs on the Hill (from left to right): Ed Fritsch, president and CEO,
Highwoods Properties (NYSE: HIW); Ron Havner, vice chairman, CEO and president,
Public Storage (NYSE: PSA); Rep. Adrian Smith (R-NE); Dana Anderson; Adam Portnoy, president,
CommonWealth REIT (NYSE: HRP); Michael Landy, COO
Monmouth Real Estate Investment Corp. (NYSE: MNR).
REITs on the Hill (from left to right): Walt Rakowich; Adam Portnoy; Rep. Richard Neal (D-MA); Arthur Hurley, vice president and senior portfolio manager, Columbia Management; Tom Heneghan, CEO,
Equity LifeStyle Properties Inc. (NYSE: ELS).
(Contact:
Robert Dibblee at rdibblee@nareit.com)
REIT.com Video: Growing Demand Fueling Opportunities for Apartment REITs
The growth of renters flooding the apartment market is creating an enviable challenge for residential REITs. An estimated 78 million Echo Boomers are entering the renter pool at a time when new supply is as low as it has been in four
decades. During NAREIT's Washington Leadership Forum, REIT.com spoke with two leading apartment CEOs about how their companies are meeting this increased demand.
AvalonBay Communities (NYSE: AVB) Chairman and Chief Executive Officer
Bryce Blair, current NAREIT chair, said the Echo Boomers have different housing needs than previous generations of renters, and AvalonBay has adjusted by offering smaller floor plans, lower price points and offering newer amenities
like cyber-lounges.
AvalonBay was one of the few REITs that maintained its development capabilities and staff during the Great Recession and that has allowed the company to quickly take advantage of new development opportunities as the market recovers. In
fact, AvalonBay was the first apartment REIT to begin construction again at the end of 2009.
"We began about $800 million in development projects in 2010 and expect to begin a like amount in 2011," Blair said.
BRE Properties, Inc. (NYSE: BRE) President and CEO
Constance B. Moore, former NAREIT chair, said apartments represent a critical component of the housing puzzle going forward, either by choice or by necessity. This is a fact she said she hopes is not lost in the mix of GSE reform.
"While apartments are a very small component of Fannie and Freddie's portfolio, it has been a very profitable one," Moore said. In addition, Moore said many REITs, including BRE, tend to use the unsecured market as opposed to Fannie and
Freddie on an ongoing basis. However, she said when they sell properties the GSEs provide liquidity on the other side.
On the transaction front, BRE has been active in both acquisitions and dispositions. BRE is looking to add assets in areas where it can concentrate its capital. "We tend to look 50 miles off the coast from San Francisco down to San Diego
where we already have capital so we can get efficiencies," Moore said.
She said it is a challenging market for acquisitions, which is why BRE has shifted some of its focus back to development.
(Contact:
Matt Bechard at mbechard@nareit.com)
NAREIT Meets With FDIC on Distressed Debt
 On Mar. 3, NAREIT representatives and members met with Federal Deposit Insurance Corp. (FDIC) officials to discuss REITs'
ability to acquire distressed debt securities.
The discussion focused on how the outdated REIT tax regulations related to the acquisition of distressed debt securities are severely limiting the ability of REITs to acquire the pools of mortgages the FDIC and the banks insured by FDIC
are selling at prices below the securities' original face value.
NAREIT President & CEO Steve Wechsler and Executive Vice President & General Counsel Tony Edwards attended the meeting, along with
NorthStar Realty Finance (NYSE: NRF) Executive Vice President Steven Kauff,
Vornado Realty Trust (NYSE: VNO) Senior Vice President of Tax Craig Stern and Cristina Arumi, co-director of Hogan Lovells' tax group.
(Contact:
Tony Edwards at tedwards@nareit.com)
REITs Up Again in February
 U.S. REITs continued their upward climb in February, as the FTSE NAREIT All REIT Total Return Index was up 4.49 percent for the month. The FTSE NAREIT All Equity REIT Total Return Index gained 4.58 percent in February.
REITs bested the broader markets in February. The S&P 500 gained 3.43 percent in February, while the NASDAQ Composite saw returns of 3.04 percent for the month.
Retail was among the best performing sectors in February, as retail REITs saw total returns of 6.51 percent. Health care REITs had total returns of 5.90 percent for the month.
In a
video interview with REIT.com, Brad Case, NAREIT's senior vice president for research and industry information, noted that the U.S. REIT market has produced a total return of nearly 9 percent through February in 2011. Relative to the
most recent market bottom in March 2009, REITs have nearly tripled in value, Case pointed out. Case attributed the strong performance to REITs' advantageous access to capital.
"Investors who were willing to brave the REIT market when everyone else was afraid of the liquidity crisis have made very strong returns since then, and that's really the key," Case said. "What's really been driving the REIT returns has
been their preferential access to capital. They have better liquidity than any other investors in real estate, and they've been able to use that to make good deals and they're likely to continue to make good deals going forward."
(Contact:
Brad Case at bcase@nareit.com)
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