Taking Stock
Moving Forward
T
he New Year always
brings with it the sense
of promise. Given the past
year, I’m sure everyone is
eager for a fresh start.
Looking back at 2008,
it seems clear that when the
dislocation in our credit markets
became unmistakable and concrete, political leadership from
both sides of the aisle acted to
stem the rising tide of dysfunction. Let’s hope they continue
to do so with more effectiveness
in 2009—in part because REITs
and real estate investment are so
dependent on well-functioning
credit and capital markets.
To this end, NAREIT conducted a series of constructive
meetings with leaders from the
Federal Reserve, the Treasury
Department and Capitol Hill
in late 2008 to discuss the
impact of the credit crisis on
the commercial real estate industry. Among other suggested
initiatives, NAREIT communicated its support for extending the government’s Term
Asset-Backed Securities Loan
Facility (TALF) to guarantee,
finance or purchase highly
rated, asset-backed securities
collateralized by newly or recently originated commercial
real estate mortgages.
Of course, history and common sense suggest that government intervention to address a
large-scale crisis will bring with
RUSS FIISCHELLA
it new regulation—justifiably so
in many instances. Just look at
how Congress established the
Securities and Exchange Commission (SEC) in 1934 after lax
investment practices helped precipitate the Great Depression.
Following a period of remarkable stress on our financial markets, the investing public almost
certainly will look to Washington
as well as to Wall Street for assurances that the mistakes of the recent past won’t repeat themselves
in 2009. NAREIT looks forward
to the opportunity to work with
the incoming Congress as well
as President Obama’s administration to help ensure that any
changes to our country’s financial
regulatory framework are constructive and wise.
On another important point,
it looks more like a matter of
“when,” not “if,” the SEC will
call for a transition from generally accepted accounting principles (GAAP) to international
financial reporting standards
(IFRS). Under proposed guidelines for making the switch,
companies would be required
to implement IFRS starting
between 2014 and 2016. The
new accounting rules would include the option for companies
to report investment properties
at fair market value. NAREIT
will work to make sure that any
modifications are reasonable in
policy and practice for publicly
traded real estate companies.
Helping to shape our country’s political dialogue is just one
part of NAREIT’s mission. In
2009, NAREIT will continue
its initiative to ensure the REIT
investment proposition is better
understood by investors of all
types from around the world.
Our efforts are making headway.
Research published by Financial Research Company reveals
that target-date funds, popular
retirement-planning products,
increased their average allocations to REITs from 5 percent
in 2007 to anywhere between 10
percent and 18 percent in 2008.
In the midst of the market
downturn, it is good to see how
more investors are embracing
the enduring value of securitized real estate.
As we emerge from the “Great
De-leveraging,” I do believe that
more and more investors will see
the benefits of owning real estate
in a liquid, securitized form.
That’s why in the long-term,
I have no doubt the REIT
approach to real estate investment will thrive and prosper.
Connie Moore
NAREIT CHAIR
CHAIRMAN AND CEO
REGENCY CENTERS CORPORATION
