REIT - September/October 2010

Editor’s Desk

Love and Governance

W

ar is an ugly, all-too-common occurrence.

They’re fought over poli-
tics, religion, economics
and other ideological be-
liefs. In my house, wars are
fought multiple times a day over
Barbie. Specifically, which one of
my daughters gets to play with
Barbie’s Dream House and who
has to set up a doll refugee camp
on the playroom floor. Oh sure,
they could share or take turns, but
telling that to 4- and 6-year-old
kids is like telling a bird to swim.

The other day, after a par-
ticularly ugly confrontation that
involved the beheading of Ken,
my youngest daughter, Peyton,
demanded to know if I loved her
or her sister more. Drawn into
the fray, I did my best to play
peacekeeper: “I love you both
the same amount.”
She wrinkled her nose and
thought about what I said. Then
she asked, “So whose love pile got
smaller when the baby was born?”
Kids think very literally by
nature. Peyton views love as a
quantitative item stored some-
where inside one of the chambers
of a person’s heart, like diamonds
in a mine. She doesn’t under-
stand that there is no capacity on
love, that there are many types of
love and even more factors that
determine where those feelings
stand on a daily basis.

Measuring corporate governance poses a similar challenge. There are multiple attributes that can be weighed, such as executive compensation structures

to determine how a company or an industry compares. However, the importance of each individual factor can vary widely among individuals.

This is one of the reasons RiskMetrics Group switched its governance rankings from a formula that assigned values to companies and industries to a ranking system that incorporates more qualitative factors and only looks at individual companies. While we can’t easily point to a ranking and say where REITs stack up against the rest of corporate America now, anecdotally the industry continues to earn high marks, particularly as it relates to board composition and executive compensation structures.

However, even though governance is subjective and difficult to measure, it’s of no less importance to investors. In fact, as this issue’s “Letting the Light In” explains, the focus on governance has become broader and deeper than ever before. Even though the industry as a whole has earned a reputation for better-than-average governance practices, it is important that REIT boards and management teams continue to improve and stay on top of the issues most important to shareholders.

If they do that, they’ll continue to get their fair share of investor love.

PUBLISHER

Steven A. Wechsler

ASSOCIATE PUBLISHER

Sheldon M. Groner

EDITOR IN CHIEF

Matthew Bechard

MANAGING EDITOR

Allen Kenney

ASSOCIATE EDITOR

Jason C. Flynn

CONTRIBUTING EDITOR

Ron Kuykendall

VICE PRESIDEN T, SALES

Chris Flood

V.P. & GENERAL MANAGER

Jeff Henriksen

ART DIRECTION & PRODUCTION

TMG

NATIONAL ADVERTISING SALES

Kathleen Thomas

Phone: (202) 721-1497

ADVERTISING TRAFFIC MANAGER

Anita Handy

Phone: (202) 331-7700

ARTICLE REPRINTS

PARS
Phone: (212) 221-9595
e-mail: reprints@parsintl.com

2010 EDITORIAL ADVISORY BOARD

Jamie Behar

Promark Global Advisors

Ralph Block

The Essential REIT

William E. Hauser

Prudential Real Estate Investors

Peter Slatin

Real Capital Analytics

REIT® is the magazine for investing in the REI T and publicly traded real estate industry. It is published bimonthly by the National Association of Real Estate Investment Trusts® (NAREIT), 1875 I Street, NW, Suite 600, Washington, DC 20006-5413. Phone 202- 739-9400.

©Copyright 2010 by the National Association of Real Estate Investment Trusts®. NAREIT and REIT are the exclusive registered trademarks of the National Association of Real Estate Investment Trusts, Inc.

Opinions expressed herein do not necessarily reflect those of the publisher or editors, nor do they necessarily represent the policies or positions of NAREIT. Investors should consult with their own investment, legal or tax advisers regarding the appropriateness of investing in any of the securities or investment strategies discussed in this publication. Nothing herein should be construed to be an endorsement by NAREIT of any specific company or products or as an offer to sell or a solicitation to buy any security or other financial instrument or to participate in any trading strategy. NAREIT expressly disclaims any liability for the accuracy, timeliness or completeness of data in this publication. Unless otherwise indicated, all data are derived from, and apply only to, publicly traded real estate securities. Any investment returns or performance data (past, hypothetical, or otherwise) are not necessarily indicative of future returns or performance.