Message from the President

March 23 to March 25, law, accounting and finance professionals gathered at NAREIT's REITWise conference to discuss a broad range of issues impacting REITs, from international financial standards convergence, to new tax and SEC rules, to corporate sustainability.

One thread that ran through many of the sessions and informal conversations, however, was discussion of what lies ahead for our industry: an appropriate topic for reflection on the 2-year anniversary of the start of the current REIT industry cycle, during which REIT returns have climbed more than 200 percent.

In the past two years, REITs have raised more than $100 billion in new capital through the public equity and debt markets. They have de-leveraged, taking our industry's debt ratio back to its historical average of 40 percent - down more than a third from the market trough. REITs also have begun to put their financial firepower to work in strategic acquisitions and development to fuel growth.

No one can forecast whether our industry will continue the kind of exceptional performance it has produced over the past two, or 20, years and, certainly, no one can predict the economic impact of developing domestic and international events. One thing we can say for certain, however, is that REITs today are financially and strategically well positioned to both seize the opportunities and weather the challenges that lie ahead.





Steven A. Wechsler
President and CEO

REITWise Wrap Up

REITWise 2011: NAREIT's Law, Accounting & Finance Conference®, held March 23 to March 25 in soggy San Francisco, brought together REIT executives and leading service providers who support their legal, financial and accounting needs. Attendance for the event was up more than 20 percent from last year to 870.

More than 70 speakers and panel participants presented during 35 sessions, roundtables and meetings at REITWise 2011. Session topics covered the state of the capital markets, fair value measurement, international financial reporting standards, REIT technical tax issues, corporate governance developments and much more.

If you missed anything during the event or want to go back over something a speaker said, the REITWise Sourcebook is now available. This valuable resource is updated every year to coincide with REITWise: NAREIT's Law, Accounting & Finance Conference, and is available at no charge to all REITWise conference registrants.

Those unable to attend the conference won't want to miss the opportunity to keep pace with peers who did attend by purchasing access to the 2011 REITWise Sourcebook beginning on April 15.

The sourcebook provides you with a substantial amount of data (more than 1,300 pages), including all of the presentations, handouts and additional materials used to convey knowledge and share information between speakers and attendees while at the event.

(Contact: Natalie Collier at ncollier@nareit.com)

REIT.com Videos: Words from the REITWise

REIT.com's video team attended REITWise 2011 and spoke with a number of attendees about some of the most pressing subjects in the areas of law, accounting and finance. Below is a summary of the videos currently available on REIT.com, with more interviews being added daily.

REITs will have to make changes as the shift to global accounting standards accelerates, said Serena Wolfe, senior manager of Ernst & Young's Global Real Estate Center. Under U.S. GAAP standards, firms typically report their real estate investments at cost, depreciating over the useful life of the asset. If U.S. firms move to the International Financial Reporting Standards, they will have to mark assets to fair value at each reporting period. "There will no longer be a gradual decline in value due to depreciation. There will now be swings up or down depending on where you are in the economic cycle," Wolfe said.

Good governance has become a hallmark of the listed REIT industry, and Bruce Johnson, executive vice president and chief financial officer of Regency Centers Corporation (NYSE: REG), said there are a number of factors driving the ongoing improved disclosure. "First, you had Regulation FD, which caused companies to provide typical information to a broader range of investors. The best way to do that is with a supplemental report," Johnson said. "You also have investors and analysts requiring and asking for more information because in our sector many of them are valuation players."

Ten REIT IPOs in 2010 raised just under $2 billion, and according to Ron Bohlert, director of NYSE Euronext's Global Corporate Client Group, 18 IPOs are set to go to market this year and should raise an additional $5.5 billion. That's in addition to the IPOs that have already occurred in 2011. Political unrest and the rising price of overseas products may decelerate the processes, however, Bohlert said.

The merger and acquisition activity in the commercial real estate industry will continue throughout the year, predicted Jay Leupp, president of Grubb & Ellis AGA Mutual Funds. As it does, it will provide a boost to valuations, he added. "As more and more investors look at the deals that have already been announced, they start to look at other public companies that could potentially be acquired," Leupp said.

With the economy and commercial real estate markets recovering, REITs are starting to hire again, said Jeremy Banoff, senior managing director with FPL Associates. He pointed to a Ferguson Partners poll conducted at the end of last year in which 60 percent of public REIT respondents said they would increase hiring in 2011. Most of the positions being added are transactional-based, he said.

REITs will feel the effect of Dodd-Frank in two ways, said Kristen Benson, vice president and senior securities counsel at Ventas, Inc. (NYSE: VTR). First, the legislation shifts the balance of power from the board to shareholders, giving shareholders more power to influence issues that used to be within the purview of the board. Second, she said, enhanced disclosure obligations and advisory votes required under the act will increase scrutiny on the boards. In general, she said, "What I see happening is legislators, regulators, proxy advisory firms and shareholders are all trying to force a one-size-fits-all approach. I think it's to the detriment of many companies."

Non-traded REITs are growing in popularity after contracting in 2008 and 2009, said Ken Betts, attorney with Locke Lord Bissell & Liddell. "It went from about a $12 billion aggregate raise in 2007 to as low as $6 billion in 2009. 2010 moved upwards closer to $9 billion, and we expect that level in 2011 as well."

(Contact: Matt Bechard at mbechard@nareit.com)

REITs Up 200 Percent in Last Two Years

Since the market trough of March 2009, the FTSE NAREIT All Equity REITs Index has gained approximately 200 percent.

The FTSE NAREIT All Equity REITs Index increased 202.3 percent from March 6, 2009, through March 30, 2011. The REIT market had dipped roughly 75 percent in the two years prior.

During that time period between 2009 and 2011, REITs' gains have nearly doubled those of the broader market as reflected by the Dow Jones U.S. Total Stock Market Index. From March 9, 2009, to March 30, 2011, the Dow Jones Index gained 113 percent.

(Contact: John Barwick at jbarwick@nareit.com)

NAREIT Comments on UPREIT Debt Offerings

NAREIT submitted comments to the Securities and Exchange Commission (SEC) on March 28 regarding proposed rules for security ratings.

The SEC's proposed rule is intended to satisfy a legislative directive to remove any reference to ratings agencies in SEC regulations, which would have the unintended consequence of making it more difficult for operating partnerships in an UPREIT context to issue debt offerings. In a letter to the SEC, George Yungmann, NAREIT's senior vice president for financial standards, said that in this case, the proposed $1 billion/three-year replacement standard for I.B.2 and I.C.2 eligibility "would create unintended roadblocks to widely followed REITs' continued access to the public debt capital markets."

Yungmann said that the recent financial crisis demonstrates why the SEC should not promulgate changes that would impede the ability of SEC-registered REITs to efficiently raise capital in the public markets.

Goodwin Proctor Partner Ettore Santucci also discussed these proposed rules in a video interview on REIT.com.

(Contact: George Yungmann at gyungmann@nareit.com)

NAREIT Participates in NAGDCA Executive Board Meeting, Capitol Hill Visits

The National Association of Government Defined Contribution Administrators (NAGDCA) held its spring board meeting and annual Capitol Hill visits in Washington, D.C. from March 26 to March 29.

NAGDCA represents defined contribution (DC) plan sponsors in the public sector, including all 50 states and large municipalities. Kurt Walten, NAREIT's senior vice president for investment affairs and investor education, attended the board meeting and Capitol Hill visits. Walten previously served as president of the NAGDCA Industry Committee.

This year's Hill visits focused on pursuing legislative changes to protect and improve the public sector DC system.

NAGDCA board members include individuals who direct the DC plans for the State of New York, the State of Oregon, the California State Teachers Retirement System, the Ohio Public Employees Retirement System, the Sanitation Districts of Los Angeles County and an industry member from Nationwide Retirement Solutions (Nationwide). In addition to Nationwide, NAGDCA industry members include other organizations with which NAREIT maintains a dialogue through its direct meetings program, such as AllianceBernstein, Fidelity, ICMA-RC, ING, Mercer, PIMCO, Prudential Retirement, TIAA-CREF, T. Rowe Price and Wellington Management.

(Contact: Kurt Walten at kwalten@nareit.com)

REITs Honored for Dividend Performance

Fourteen REITs were honored for their superior dividend performance by Keefe, Bruyette & Woods (KBW), a global investment bank specializing in the financial services sector. KBW's "honor roll" recognized those REITs that demonstrated a track record of increasing or maintaining their dividends from 2000 to 2010.

The winning companies include, in ranking order: Public Storage (NYSE: PSA), Corporate Office Properties Trust (NYSE: OFC), Essex Property Trust, Inc. (NYSE: ESS), PS Business Parks, Inc. (NYSE: PSB), Taubman Centers Inc. (NYSE: TCO), AvalonBay Communities, Inc. (NYSE: AVB), Realty Income Corporation (NYSE: O), Federal Realty Investment Trust (NYSE: FRT), Tanger Factory Outlet Centers, Inc. (NYSE: SKT), Urstadt Biddle Properties Inc. (NYSE: UBA), National Retail Properties, Inc. (NYSE: NNN), Sun Communities, Inc. (NYSE: SUI), Health Care REIT, Inc. (NYSE: HCN) and MAA (NYSE: MAA).

"While there is a tremendous amount of focus by REIT investors on net asset value creation, we continue to believe, over time, dividends are a particularly relevant weighing mechanism and ultimately a key factor for investing in the sector," said KBW's Sheila McGrath, senior vice president for equity REIT research.

To qualify for the award, a company needed a market capitalization of $500 million or greater. Additionally, it must have maintained or increased dividends each year in the time period. The company also must have a 2011 adjusted funds from operations payout ratio lower than 95 percent.

(Contact: Carisa Chappell at cchappell@nareit.com)

New CleanREIT® Environmental Insurance Program

NAREIT has selected Maclean, Oddy & Associates as the administrator for an exclusive new CleanREIT® environmental insurance program to be underwritten by Zurich. The new program is available only to NAREIT Corporate Members, and provides a state of the art insurance product consisting of a pre-negotiated package of policy terms and conditions specifically designed, subject to underwriting, to address many of the environmental liability exposures faced by NAREIT Corporate Members.

The CleanREIT® program has been designed to provide NAREIT Corporate Members with the combined program strengths of outstanding insurance protection, together with leading environmental risk management expertise. The CleanREIT® insurance coverage has been designed to protect NAREIT Corporate Members against a variety of environmental exposures - including many of the day-to-day environmental risks involved in real estate property ownership, as well as many of the environmental liabilities associated with real estate development, acquisition, or sales; and to loss of rental income due to unknown pollution conditions discovered on-site.

To learn more about the CleanREIT® program, please call George Wilson, vice president, Maclean, Oddy & Associates at (214) 855-7758, or gwilson@macleanoddy.com.

(Contact: Sheldon Groner at sgroner@nareit.com)

REIT.com Video: Sheldon Groner, NAREIT

NAREIT recently held its first-ever Leader in the Light Working Forum, which was hosted at the Dallas offices of RealFoundations, a management consulting firm. The March 7-8 event was a collaborative working session to discuss the key drivers of sustainability in real estate, share participant's leading sustainability practices and identify future events, initiatives and milestones in sustainability.

Sheldon Groner, NAREIT's executive vice president of finance and operations, helped organize the event and participated in the forum. He said the forum is an extension of NAREIT's successful Leader in the Light Award program, which was started in 2005 as a way to recognize NAREIT members that have demonstrated excellence in energy efficiency.

While the awards have gained in popularity each year, the amount of questions from companies looking for additional information related to the program and sustainability has increased even more, Groner said. NAREIT recognizes the importance of addressing the challenges and opportunities of sustainability; and it believes that member companies have demonstrated great progress in this area over the past several years. But of course more work lies ahead; and this forum helped participants better understand sustainability issues.

"We felt we could put together a forum for companies to work in a very collegial and collaborative way to share information and learn what their peers are doing," Groner said. "This forum is all about the sharing of ideas among individuals who primarily are dedicated to this effort. But it is also for individuals who want to get involved in this important issue."

(Contact: Sheldon Groner at sgroner@nareit.com)

Calvin Schnure Joins NAREIT Staff

Calvin Schnure joined the NAREIT staff on March 28 as vice president for research and industry information. Schnure has a diverse background in the financial sector, including positions at the Federal Reserve Board, JPMorgan Chase, the International Monetary Fund and, most recently, Freddie Mac, where he served as director of economic analysis.

Schnure will work with Brad Case and John Barwick in the Research & Industry Information department and NAREIT's Investor Outreach team, to expand NAREIT's research capabilities and to increase our coverage of the investment community. NAREIT is pleased to expand activities in these areas.

"As the REIT industry has grown both in the United States and around the world, and our relationships with the investment community have deepened, we now have greater opportunity to develop and refine NAREIT's Research & Investor Outreach program to more effectively and responsively advocate real estate investment through REITs for all investors," said Michael Grupe, NAREIT's executive vice president of research and investor outreach.

Schnure holds degrees from Williams College, Tufts University and a Ph.D. in Economics and Finance from the University of California at Berkeley.

(Contact: Michael Grupe at mgrupe@nareit.com)

REIT.com Video: Don Miller, Piedmont Office Realty Trust

Since going public in February 2010, Piedmont Office Realty Trust's (NYSE: PDM) world has undergone substantial changes, according to Don Miller, the company's president and CEO.

"If I look back two years ago and think about the options available to us in terms of being a non-traded REIT without liquidity on a publicly traded exchange, the world has changed pretty dramatically," he said. "Having become public was great for us, because it allowed us great liquidity for our shareholders and gave them the option of when they want to trade in and out of their stock."

Miller said Piedmont is considering the possibility of incorporating joint venture partners "over a period of time" on some assets. However, he noted that these would be situations where the company hopes to increase or decrease its ownership positions.

(Contact: Matt Bechard at mbechard@nareit.com)

REITs in the Community

March 21, 2011: Mick Krieger (second from right), chief of staff to House Speaker John Boehner (R-OH), and Ryan Day (second from left), Rep. Boehner's district director, toured Simon Property Group's (NYSE: SPG) Cincinnati Premium Outlets in Monroe, Ohio. They also visited with (left to right): Lewis Taulbee, general manager, Premium Outlets; Mary Ann Mattscheck, assistant general manager, Premium Outlets; and Steve Cupelli, regional vice president, Premium Outlets. While at the mall, Krieger and Day received a detailed update on the economic impact of the Premium Outlets on the Cincinnati area, as well as the plans Simon has under consideration for future expansion. In addition, the staff members learned about several legislative issues to be pursued during the 112th Congress, including reform of the Foreign Investment in Real Property Tax Act, introduction of the U.S. REIT Act to make minor modifications in the REIT rules and efforts to achieve greater tax fairness from Internet commerce.



March 22, 2011: Rep. Howard Coble (R-NC), left, is pictured with Steve Tanger, president and CEO of Tanger Factory Outlet Centers, Inc. (NYSE: SKT), during Coble's visit to Tanger's headquarters in Greensboro, N.C. Coble was updated on Tanger's recent activities and the economic impact these developments have had on surrounding areas. In addition, the company's forthcoming opening of a new development in Hilton Head, S.C., was discussed. Coble learned about several legislative issues to be pursued during the 112th Congress, including the introduction of the U.S. REIT Act to make minor modifications in the REIT rules and efforts to achieve greater tax fairness from Internet commerce.



March 23, 2011: Rep. Steve Rothman (D-NJ), left, participated in the groundbreaking of AvalonBay Communities, Inc. (NYSE: AVB) Avalon at Wesmont Station in Wood-Ridge, New Jersey. Also present at the groundbreaking were (second from left to right): Paul Sarlo, Mayor of Wood-Ridge; Ron Ladell, AvalonBay's vice president of development; and Ralph Zucker, president of Somerset Development, AvalonBay's partner on the project. The 406-unit community is part of Wesmont Station, a $400 million mixed-use project built near a NJ Transit train station.

(Contact: Ryan Kilpatrick at rkilpatrick@nareit.com)

Save the Date for REITWeek 2011

REITWeek 2011: NAREIT's Investor Forum will be held June 7 to June 9, 2011 at the Waldorf=Astoria hotel in New York City. Thousands will converge to hear more than 100 REIT management teams provide updates and projections that enable attendees to identify important company, sector and market trends.

In addition to NAREIT Corporate Members, only qualified institutional investors and sponsors are invited to attend REITWeek 2011: NAREIT's Investor Forum.

Look for more information in the coming weeks including important dates and event details. For more information on how to sponsor REITWeek, contact Chris Flood.

(Contact: Natalie Collier at ncollier@nareit.com)