In a CEO Spotlight session at Nareit’s 2020 REIT Investor Relations Symposium, CEOs from four REITs discussed the importance of crisis communications.
Nareit and the New York Stock Exchange cohosted the fourth annual REIT IR Symposium, held on June 1, the day before the kick-off of Nareit’s REITweek: Virtual Investor Conference. Stephanie Krewson-Kelly, vice president of investor relations at Corporate Office Properties Trust (NYSE: OFC), moderated the panel.
Sumit Roy, president and CEO of Realty Income Corp. (NYSE: O), said that as the coronavirus crisis unfolded, his company increased communications with key stakeholders, including a focus on active investor outreach.
“Communication and transparency are always important, but it is especially true during times of uncertainty such as the one that we are faced with in the COVID-19 pandemic,” he said.
Stephen Budorick, president and CEO of Corporate Office Properties Trust, echoed Roy’s comments about increased communications, noting that his company has held weekly updates for remote staff and regular conference calls for investors. He said COPT has been focused on its tenants, including sharing best practices with them from the Centers for Disease Control and Prevention and World Health Organization.
Peter Baccile, president and CEO of First Industrial Realty Trust (NYSE: FR), said that his company had its first call regarding COVID-19 on March 2, and although it was early and information was limited, the company felt it was crucial to begin that process of communication.
“During a time of upheaval and volatility, there’s a lot of confusion. People are worried and frequent communication is imperative to maintaining calm and productivity,” Baccile said.
Health care REIT LTC Properties, Inc. (NYSE: LTC) took a more tactical approach, according to Wendy Simpson, president, CEO, and chairman. She said that supplies were the top priority among her company’s tenants, so LTC set up a network to help them source supplies from each other.
Krewson-Kelly noted that through first quarter earnings, approximately half of the companies in the S&P 500 chose to withdraw their 2020 guidance and asked how each management team approached resetting or withdrawing guidance on their first quarter calls.
Simpson said that LTC withdrew its guidance because of the uncertainty surrounding its rent collection, but that skilled nursing facilities have had the benefit of government relief funds so LTC expects to have a better overall understanding by the third quarter.
In reference to why Realty Income withdrew its guidance, Roy said: “There have been too many global health and macroeconomic factors which are out of our control to allow us to confidently predict what our 2020 financial performance could look like.”
First Industrial, on the other hand, only modified its guidance slightly, and Baccile noted that industrial REITs have “done pretty well” over the course of the pandemic. “We’re not unscathed, but we’re certainly in the well-off category,” he said.
Budorick similarly noted that the strength of the defense industry and COPT’s high concentration of defense and government tenants led to the REIT’s rent relief requests totaling less than 0.75% of its annual rental revenue.
Turning to investor concerns around potential changes in demands for commercial space, the panel had different takes on what more long-term social distancing could mean for REITs. Simpson said there could be significant redesigning of skilled nursing properties, which are currently seeing fewer admissions for elective surgeries.
“They’re having a bit of a downturn at this moment, and I'm sure there’s a lot of repositioning and reallocating space so that there is enough social distancing between patients and between the caregivers,” she said.
Budorick, on the other hand, said defense and intelligence work cannot be done remotely: “With regard to our portfolio, I do not believe this COVID virus will negatively impact demand overall.”