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February 27, 2012
Message from the President
 For more than half a century, REITs have demonstrated their ability to attract investment capital through the public markets to fund the development, finance and ownership of real estate. In the process, REITs have rewarded their shareholders and today represent a vibrant sector of the commercial real estate marketplace. Not surprisingly, our industry’s positive track record is drawing attention from a variety of actors seeking to achieve a broad range of national policy goals.
A case in point is the Obama administration’s recently released 2013 budget proposal, which contains a recommendation that the Low Income Housing Tax Credit (LIHTC) Program be modified to benefit REIT shareholders. The program currently provides incentive tax credits that can be passed along by developers of affordable housing to their investors. REITs cannot pass such tax credits through to their shareholders; however, the administration’s proposal would instead allow participating REITs to make a portion of their dividends tax exempt, encouraging them to participate in the expansion of the affordable housing market.
As the Treasury Department stated: “The effectiveness of LIHTCs in increasing the construction and preservation of affordable housing would be enhanced if there were more demand for these credits…If REIT shareholders could benefit from any LIHTCs that REITs receive, there would be an increase in demand.”
REITs today also are discussed as a way to help fund our nation’s infrastructure development. A Financial Times article last week written by investment banker and former diplomat Felix Rohatyn and former U.S. Transportation Secretary Rodney Slater argued for using REITs to encourage investment in roads, airports, seaports and transmission lines. The writers noted: “Applying the REIT…model to infrastructure assets would attract investment from the deep U.S. retail and institutional investor market, dramatically increasing funding support for new projects. Projects that were once unable to attract support could become financially viable, and more infrastructure projects could be supported.”
A new study by mortgage-backed security pioneer Lewis Ranieri and University of California economist Kenneth Rosen noted that REITs could become part of the solution to clearing foreclosed homes from the market through government programs to assist them in acquiring foreclosed homes that would be turned into rental properties. The authors explained: “If a critical mass of properties and leases have been acquired, a capital market exit might be viable, such as a REIT….”
Additionally, as the administration continues to wrestle with a way to unwind the holdings of Fannie Mae and Freddie Mac, mortgage REITs have been viewed as part of a private sector solution for providing liquidity to the housing finance market.
Increasingly, the success of the REIT approach to real estate investment leads others to see REIT-based real estate as part of the solution to some of our nation’s most pressing needs.
Steven A. Wechsler
President and CEO
Obama Administration Releases Business Tax Reform Framework
 Treasury Secretary Tim Geithner released a joint report by the White House and the Treasury Department on Feb. 22 focused on a framework for business tax reform.
The Obama administration’s framework does not specifically address REITs or real estate investment. It does identify four central issues creating “distortions” of choice in the tax system: 1) distorting the form of investment by industry and asset type; 2) distorting the financing of investment; 3) distorting the form of business; and, 4) distorting the investment decision on the basis of geography.
The Obama administration’s framework also identifies five essential elements of business tax reform: 1) elimination of dozens of largely unidentified tax “expenditures” to broaden the tax base and to cut the corporate tax rate to 28 percent (25 percent for manufacturing); 2) encouragement of manufacturing, clean energy, and research and development through tax “expenditures;” 3) strengthening the international tax system, in part by establishing a minimum tax on foreign earnings; 4) simplification of the tax system for small businesses; and 5) avoidance of any increase to the deficit, to be accomplished in part by the elimination of now temporary tax provisions or by making permanent others which will be “paid for” in some fashion.
The framework lays out a “menu of options” without endorsing specific proposals for accomplishing its goals. They include changing the deductibility of interest expense, modifying depreciation deductions to more closely match economic depreciation, conforming more closely book and tax accounting and establishing greater parity between large corporations and large non-corporate counterparts.
(Contact: Tony Edwards at tedwards@nareit.com)
NAREIT, Chamber of Commerce Comment on the PCAOB’s Due Process
 On Feb. 23, NAREIT joined other members of the U.S. Chamber of Commerce’s Financial Instruments Reporting & Convergence Alliance (FIRCA) in submitting a letter to both the Securities and Exchange Commission (SEC) and the Public Company Accounting Oversight Board (PCAOB). FIRCA requested that standard setters seek “a wide range of input to ensure the proper consideration of business operations and potential unintended consequences in the development and implementation of accounting and auditing standards.”
The letters emphasized that the PCAOB’s recent Concept Release on Auditor Independence and Audit Firm Rotation and Notice of Roundtable (PCAOB Release No. 2011-006, Aug. 16, 2011, PCAOB Rulemaking Docket Matter No. 37) was an example of “a failure to have sufficient broad based input before publicly moving forward on an issue.” The letters observed that, as of Jan. 18, 2012, 92 percent of respondents on the Concept Release opposed mandatory audit firm rotation. NAREIT was among the 92 percent that vehemently opposed the Concept Release, and submitted a comment letter to the PCAOB to that effect. FIRCA questioned why the PCAOB would move forward with the Concept Release given the overwhelmingly negative response.
FIRCA requested that the PCAOB establish a business advisory group, which could have provided early input to the PCAOB on the Concept Release, and saved time and resources for other issues.
Another recommendation offered by FIRCA was to employ cost-benefit analysis when developing accounting and auditing standards. FIRCA indicated that this recommendation was originally made in 2008 by the SEC’s Advisory Committee on Improvements to Financial Reporting.
(Contact: Christopher Drula at cdrula@nareit.com)
NAREIT Welcomes New Corporate Member
 NAREIT welcomes Healthcare Realty Trust (NYSE: HR) as its newest Corporate Member.
Healthcare Realty Trust is publicly traded, internally managed equity REIT that acquires, develops, owns and manages medical office and other outpatient health care properties throughout the U.S. The company is based in Nashville, Tenn. David Emery is the company’s chairman and CEO.
(Contact: Bonnei Gottlieb at bgottlieb@nareit.com)
NAREIT Annual Report Now Available
 REITWay: NAREIT’s Annual Report is now available on REIT.com. REITWay reviews the key events of the past year, as well as the work NAREIT undertook to preserve, perfect and promote the REIT approach to real estate investment.
(Contact: Matt Bechard at mbechard@nareit.com)
REITWise Mobile App Now Available
 REITWise 2012®: NAREIT's Law, Accounting & Finance Conference® brings together REIT executives and leading service providers that support their legal, financial and accounting needs.
Registration is now available online for this important event, which will be held March 21 to 23 at the Westin Diplomat in Hollywood, Fla.
More than 40 sessions, roundtables and events provide attendees with many opportunities to hear the latest legal, financial and accounting insights concerning capital markets, financial standards, global investment opportunities, SEC policies, tax updates and more.
The breadth of the REITWise educational program provides attendees the opportunity to earn up to 22 hours of CPE credits or 18 hours of CLE credits.
As with recent NAREIT events, attendees will be able to download a REITWise Mobile App.
The REITWise Mobile App is available for use on all mobile devices and will assist attendees with planning and customizing the event to meet their needs.
REITWise attendees can select sessions and set meetings to create a customized calendar for the event based on their preferences.
Learn more about it on our mobile app help page or download it now and find out all it has to offer first-hand.
(Contact: Katelyn Rowland at krowland@nareit.com)
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