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June 17, 2013
Message from the President
 As the lead story in this issue of NewsBrief reports, NAREIT last week provided input to the U.K. government supporting changes to their REIT rules that would increase institutional investment in U.K. REITs.
The changes would be similar to modifications that Congress made to the U.S. REIT rules as part of the Omnibus Budget Reconciliation Act of 1993, which made it practical for pension plans to invest in REITs. Congress’ action two decades ago to further open U.S. REITs to retail investors through institutional investment helped the U.S. REIT industry to grow from a group of companies with a combined $57 billion in assets and an equity market capitalization of $23 billion to an industry with $750 billion in assets and an equity market capitalization of more than $600 billion.
Congress’ decision also enabled pension funds to more effectively provide for the retirement security of their plan participants, as equity REITs delivered 11 percent compound annual total returns over the 20-year period compared to 8 percent total returns for the S&P 500.
The U.S. REIT experience continues to be a model for the world as more than 25 countries have created their own REIT regimes and a number of others – including the fast-growing economies of China, India and Indonesia – are actively considering REITs.
The growing global uniformity of REITs patterned on the U.S. REIT rules today is making possible the creation of a variety of global real estate investment products that are providing benefits to individual and institutional investors alike, and also are helping to channel investment capital to foster the growth of economies around the world.
NAREIT has actively worked with policymakers in countries around the globe to share the lessons of the U.S. REIT experience and encourage the harmonization of REIT rules. Our communications efforts have produced positive results and, as we did last week in the U.K., we will continue this important global outreach.
Steven A. Wechsler
President and CEO
NAREIT Submits Comments on U.K. REIT Rules
 NAREIT offered feedback last week to the United Kingdom on potential changes to the country’s REIT regime.
Under current law, U.K. REITs cannot be a “close company,” which dictates that a U.K. REIT cannot be held by five or fewer people. A 2012 modification to the law added a caveat to prevent U.K. REITs from being treated as closely held companies merely on the grounds that it has one or more institutional investors. The U.K. government is now considering whether REITs should qualify as institutional investors.
“Because a U.S. REIT by definition may not be ‘closely held’ (that is, five or fewer individuals may not control a U.S. REIT), we believe that a U.K. REIT’s ownership by a U.S. REIT should not cause the U.K. REIT to be considered a close company,” NAREIT said. “Accordingly, NAREIT recommends that the U.K. include a U.S. REIT in the list of institutional investors whose ownership in a U.K. REIT will not cause the U.K. REIT to be considered a closely held company.”
(Contact: Dara Bernstein at dbernstein@nareit.com)
NAREIT Launches Investor App
 To meet the needs of investors increasingly seeking information away from their desks, NAREIT recently launched the REIT Investor App. After downloading the app to their iPhone or iPad, users have the ability to scan indexes, stock prices and other financial data. They can also use filters to narrow a search down to specific segments of the industry. Users can also drill down into individual company specifics, including financial data, events, news and press releases. Below is a detailed list of features within the REIT Investor App:
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Stock prices for publicly listed REITs on the NYSE/AMEX and NASDAQ.
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Profile pages for public REITs that are NAREIT members.
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Returns for 42 different FTSE NAREIT indexes.
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Top financial news and press releases updated throughout each business day.
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Calendar listing upcoming conference calls, earnings announcements and company meetings.
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Links to company websites and investor relations pages allow users to "go to the source" for complete company information.
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Users can add companies to a list of favorites, enabling users to build a portfolio of companies to watch more closely.
The app is available for free download in the iTunes store by searching “REIT Investor.”
(Contact: Jeff Henriksen at jhenriksen@nareit.com)
REIT.com Videos: CEO Spotlights
REIT.com’s video team sat down with three dozen REIT CEOs during REITWeek 2013 to discuss recent company developments, strategic plans and thoughts on where the market is headed. New videos will be made available on REIT.com regularly for the next several weeks. Below is a sample of the interviews currently available.
 Trevor Bond, president and CEO of W.P. Carey (NYSE: WPC), discussed the company’s pillars of success over the past four decades.
“I think that our longevity stems from our ability to make money for our investors. Fundamentally, that’s really what it’s all about,” he said. “As an investment manager, we’ve had 14 funds come full cycle since 1979 through a wide range of cycles.”
 Competition for assets in the single-family rental market has increased steadily in the past year. However, Laurie Hawkes, president, COO and co-founder of American Residential Properties (NYSE: ARPI), feels her company is ideally positioned to be a market leader.
“It’s a huge opportunity,” she said. “There is some increasing competition. There are markets such as Phoenix where house prices have gone up. We consider that great, considering that’s about 41 percent of our portfolio. What sets us apart is we are internally managed. We’re the only publicly traded internally managed REIT in this space. We also have an independent and highly accomplished and experienced board from the public sector.”
 Sam Landy, president and CEO of UMH Properties (NYSE: UMH), said the tide appears to be turning in the manufactured home industry. He said his company is primed to take advantage of a market recovery.
“We’ve done some acquisitions in Indiana and Tennessee where people built 300-space communities, sold about 150 homes in the good times, couldn’t sell in the bad times and wound up selling to us at about 8 percent cap. So, the upside is substantial should we fill those vacant sites.” he said.
 Apartment fundamentals on the West Coast continue to be strong, which has certainly benefited Essex Property Trust (NYSE: ESS), even if it has made the transaction landscape more competitive, according to Michael Schall, president and CEO.
It is more difficult,” he said. “Owners of property are pretty pleased with the current conditions. They see the economy getting better. Rent growth is good amid very low interest rates, which provides a good cash flow, so they’re reluctant to sell. Buyers, on the other hand, have seen a lot of rent growth already occur and are concerned about overpaying.”
 One of the most active companies on the acquisition front this year has been American Realty Capital Properties (NASDAQ: ARCP). Nick Schorsch, chairman and CEO, described the strategy behind his company’s recent acquisitions with GE Capital and for CapLease (NYSE: LSE) and what lies ahead.
“We intend to continue to carefully construct – we’re not looking to buy everything, we are looking to buy what fits out company,” he said. “There’s definitely more to come. We are continuing and have put out guidance for at least $1 billion of new organic acquisitions from our pipeline of small assets and we are looking at a number of other strategic and corporate opportunities as the year unfolds.”
 Bobby Taubman, chairman, president and CEO with Taubman Centers, Inc. (NYSE: TCO), discussed how the regional mall sector has been performing and if that trend can continue.
“Our fundamentals right now are unbelievable,” Taubman said. “We’ve had three years in a row of unbelievable sales. When you’re up over 30 percent three years in a row, it creates a halo over your whole business. All the metrics in our business - occupancy, lease space, average rent growth, NOI comp growth, our spreads on leasing - all of these things are excellent metrics. We’re at the highest occupancies in our history. All the metrics are good, and it really comes from sales. At the end of the day, if tenants are doing business in your shopping center, other tenants want to be there, and they pay you more rent.”
(Contact: Matt Bechard at mbechard@nareit.com)
Pure Property Research Presented at AREUEA Meeting
 Research conducted by NAREIT Vice President of Research and Industry Information Calvin Schnure and Philip Seagraves, assistant professor in the Finance & Business Law Department at the University of Wisconsin, related to the FTSE-NAREIT Pure Property Index®, was presented last month at the mid-year meetings of the American Real Estate and Urban Economics Association (AREUEA) in Washington, D.C.
Their research shows that REITs’ stock market returns contain valuable information for predicting future returns in private commercial real estate. REIT returns by property type, as well as at the aggregate level, adjust quickly to news that may affect future returns on both public and private holdings of real estate. This information can be important in managing the risks in diversified portfolios with real estate of any form.
NAREIT Senior Vice President of Research and Industry Information Brad Case, who developed the Pure Property Index in conjunction with the Center for Real Estate at the Massachusetts Institute of Technology, and NAREIT Research Manager Dmitriy Glumov also attended the conference. Additionally, Schnure chaired a research panel on mortgage default during the conference.
(Contact: Calvin Schnure at cschnure@nareit.com)
REIT.com Videos: Market Insights
REIT.com’s video team sat down with more than 70 industry leaders during REITWeek 2013 to get their insights into the current state of the REIT market, where things are heading and what specific issues and trends they are watching. New videos will be made available on REIT.com regularly for the next several weeks. Below is a sample of the interviews currently available.
 Marty Cicco, senior managing director with Evercore Partners, discussed potential signs of major transactions percolating in the REIT market.
“You’ve seen a lot of activity in the private REIT sector, in that you have a number of companies that are being forced to list. And a couple of the existing companies have been quite acquisitive over the last few months,” he said. “I think health care has some more consolidation left. If one thing came out of the crisis, you did see for the first time in the history of the REIT sector much more of a bifurcation between the winners and losers, so you do have some significant multiple spread or gap between the top-tier companies and the lower-tier companies. We think activity will pick up, but I’m not sure anything will hit the major category. I think each sector has the ability to have some further consolidation.”
 Scott Crowe, managing director with Resource Real Estate, shared his thoughts on what he views as an improving situation in the European real estate market.
“The underlying commercial real estate markets have stabilized,” he said. “If you have good, quality real estate, there’s debt available, and the spreads are very wide. I think Europe’s attractive. It doesn’t have to be the highest-quality real estate, but stabilized real estate in a decent location. Where you have to still be careful is development, leverage and the periphery. It’s still too early to take that kind of risk. But I definitely think we’re in the bottoming-out phase of the European real estate market.”
 Jed Reagan, analyst with Green Street Advisors, discussed the office sector’s adaptability in light of the difficult market conditions that have held sway since the Great Financial Crisis. According to Reagan, high-quality portfolios have helped office REITs cope with the tough economic terrain.
“Office REITs are actually faring relatively well in this environment,” he said. “They’re seeing slow but steady occupancy growth. The REITs that are doing best are those that have exposure to energy- and tech-driven markets, such as San Francisco or Austin or Houston.”
(Contact: Matt Bechard at mbechard@nareit.com)
GRESB, Leader in the Light Deadline Approaching
 NAREIT encourages its corporate members to participate in the 2013 Global Real Estate Sustainability Benchmark (GRESB) Survey and NAREIT's 2013 Leader in the Light award program, which are open for responses until July 1. If you have not already done so, you can register for the 2013 GRESB Survey and the 2013 Leader in the Light award program via GRESB’s online portal at www.gresb.com.
 Over the past two years, NAREIT has been involved in an advisory capacity with GRESB; a global consortium of institutional investors and real estate industry associations committed to rigorous and independent evaluation of the sustainability performance of listed and private company real estate portfolios. GRESB's annual benchmarking survey aims to evaluate sustainability performance of REITs, real estate companies and funds on a portfolio-wide basis; and to inform investors of the success and progress of the respondents’ sustainability initiatives. Last June, NAREIT's Executive Board approved NAREIT migrating its Leader in the Light award program framework into the GRESB platform; beginning with last year’s (2012) Leader in the Light competition.
An important element of NAREIT’s 2012 migration into GRESB included integrating into the GRESB platform a set of supplemental “Leader in the Light” questions. While the 2012 Leader in the Light questions were submitted separate from the GRESB Survey, for 2013 they are embedded directly within the GRESB Survey. Scoring for the 2013 Leader in the Light awards will result from a combination of the score on the baseline GRESB survey (scored by the GRESB system, and which will carry a 70 percent weight); together with the score on the supplemental Leader in the Light questions (scored by a panel of judges, and which will carry a 30 percent weight).
(Contact: Sheldon Groner at sgroner@nareit.com)
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