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February 13, 2012
Message from the President
 The Obama administration's proposed 2013 budget released today will be widely debated in the days and weeks ahead, but three items in the budget unquestionably would be positive for the U.S. REIT industry.
The administration's budget proposes to eliminate the preferential dividend rule for all SEC-registered REITs. It also would change the existing deduction for energy efficient commercial building expenditures to a tax credit that could benefit REITs and their shareholders, and it would reform the Low Income Housing Tax Credit to allow multifamily REITs to participate in the program.
NAREIT has actively supported changes along these lines with the administration and on Capitol Hill. Repealing the preferential dividend rule would eliminate a law that can result in a REIT losing its dividends paid deduction, or even its REIT status, for an accidental error in the distribution of dividends to its shareholders.
We have reached out to legislators and Treasury Department officials to explain the need for this rule to be changed, and the Obama administration's 2012 budget did propose to eliminate it for listed REITs. NAREIT has continued to make the case for its repeal for all public REITs – listed and non-listed alike.
We also have consistently advocated for proposals that would allow REITs to participate appropriately in tax-related initiatives to further national policy, such as the administration's Better Buildings Initiative.
The three REIT provisions included in the administration's 2013 budget indicate that our industry's voice is being heard on these issues. We will continue to monitor and provide our support for these proposals as the budget discussion continues.
Steven A. Wechsler
President and CEO
SEC Staff Share Areas of Focus in Reviewing 2011 10-K Filings
 On Feb. 8, staff members of the Division of Corporation Finance of the Securities and Exchange Commission (SEC) shared with NAREIT their intended areas of focus in their reviews of 2011 REIT 10-K filings.
Among the areas of emphasis for equity REITs, the staff members will focus on net operating income (NOI) disclosures and the Management's Discussion and Analysis disclosure. For mortgage REITs, one area of emphasis will be disclosures provided regarding the characteristics of mortgage REIT investment portfolios, including asset type, collateral type, interest rate type, geographic diversification of collateral, vintage, duration of assets, loan size and loan seasoning.
Read NAREIT's SFO Alert for more details on the areas of focus.
(Contact: Christopher Drula at cdrula@nareit.com)
REIT.com Video: Calvin Schnure, NAREIT
 On Feb. 3, the government reported that payrolls rose 243,000 in January and the unemployment rate fell to 8.3 percent. NAREIT Vice President of Research and Industry Information Calvin Schnure said the report was considerably stronger than expected, with gains across most industries and a rise in average hourly earnings.
What's more, Schnure added that benchmark revisions to last year's employment figures show the slowdown in job growth last summer was not as bad as previously estimated.
"The most recent news is the clearest sign so far that the recent sluggish growth has been due to temporary factors, as well as the lingering effects of the housing and foreclosure crisis," Schnure said. "But job growth in the 250,000 range and higher will go a long way toward helping heal the housing market."
One of the surprises in the payroll report was that manufacturing employment rose 50,000. Schnure said that news, in conjunction other recent data, is a sign that manufacturing activity is picking up.
"Many people are worried that the loss of factory jobs means the U.S. manufacturing base is eroding, which could undermine one of the pillars of the U.S. economy," Schnure said. "It's true that many firms have outsourced lower-skilled jobs overseas, but an even more important factor in the trend in manufacturing employment has been the surprisingly robust productivity gains in domestic output. For example, manufacturing productivity growth has averaged over 3 percent annually over the past three years."
Drilling down to look at the industrial sector specifically, Schnure said 2011 was a fairly good year for industrial REITs, despite the sluggish GDP growth in the U.S. and abroad. Vacancy rates in industrial properties have been moving down steadily as production has continued to ramp up, he said.
"If the economy continues to gain momentum this year, as we expect, the industrial market should benefit, especially since the lack of new supply will cause further firming in the market and help rents stabilize," Schnure said. "To be sure, we expect construction activity to pick up, but on balance, and the market should continue to firm."
(Contact: Calvin Schnure at cschnure@nareit.com)
HCP Named Dividend Aristocrat
 HCP (NYSE: HCP) has been named to the S&P 500 Dividend Aristocrats Index. This highly select index recognizes members of the S&P 500 that have a market capitalization in excess of $3 billion and have increased dividends every year for at least 25 consecutive years. The index is comprised of 51 Dividend Aristocrats representing a broad spectrum of industries. HCP is the only REIT to achieve this designation.
"Our board's decision last month to once again raise the dividend reflects our confidence in both the near- and long-term fundamentals of our business, as well as our commitment to delivering attractive cash returns to our shareholders. We are very proud of our 27-year history of consecutive dividend increases and are pleased to be included among this prestigious group of companies," said Jay Flaherty, HCP's chairman and CEO.
"The entire REIT industry congratulates HCP on its inclusion in the S&P 500's Dividend Aristocrats Index," said NAREIT President and CEO Steven A. Wechsler. "Its accomplishment is a tribute to the quality of the company's management team over an extended period of time, as well as a testament to the REIT approach to real estate investment. Notably, the Dividend Aristocrats Index highlights the importance of both capital growth and dividend income over at least 25 years – qualities embedded in the REIT investment proposition. Having just celebrated the 20th anniversary of the Modern REIT Era, we look forward to seeing more and more REITs join this elite group in the future."
(Contact: Matt Bechard at mbechard@nareit.com)
NAREIT Submits Comments on U.K. REIT Proposal
 NAREIT submitted comments to the United Kingdom on Feb. 10 in response to proposed changes regarding the country's REIT provisions.
Primarily, NAREIT recommended that U.S. REITs be considered "institutional investors" in light of proposed modifications to the U.K. REIT "close company" provisions. NAREIT noted that because a U.S. REIT may not be closely held by definition, its ownership of a U.K. REIT should not cause the U.K. REIT to be considered a close company. This change would allow a U.S. REIT to own more than 10 percent of a U.K. REIT's stock.
(Contact: Dara Bernstein at dbernstein@nareit.com)
REIT.com Video: Jim Fetgatter, AFIRE
 Foreign investors view the U.S. commercial real estate market as a more favorable place to invest today than it has been in the past five years, according to Jim Fetgatter, chief executive of the Association of Foreign Investors in Real Estate (AFIRE).
According to AFIRE's 20th Annual Foreign Investment Survey, the U.S., which at one point had always scored highly in the annual survey as a stable, secure place to invest, has suffered from a decreasing score in recent years. Fetgatter said the improvement in investors' view of the U.S. market may be tied to greater concerns in other parts of the world.
In terms of U.S. cities, Fetgatter said the survey results still favored the major gateway cities such as Washington, New York, San Francisco, Los Angeles, and Boston.
"Investors have not really spread out to any other cities, at least as not as far as office and retail are concerned. Some are investing in secondary cities if they can buy a portfolio of multifamily housing," Fetgatter said.
When it comes to emerging markets, Brazil was the most popular among survey respondents, according to Fetgatter.
"That was a bit of a surprise," he said, adding that investors are also still favorable on China. "On the whole, there were more emerging market countries listed in their responses this year than there has been in the last several years. Investors have been very conservative in which emerging markets they're thinking about going into."
(Contact: Matt Bechard at mbechard@nareit.com)
Let Us Help Share Your News
 The role of social media in the business and investing world continues to evolve and expand at an amazing pace. Social networks such as Twitter and Facebook now play integral roles in communication on a global scale, and serve increasingly diverse purposes in both our personal and professional lives.
Twitter, with its network of more than 400 million users, has become a key venue for investors to share news and information on companies and markets of interest. NAREIT's Twitter account (@REITs_NAREIT) currently has more than 4,500 followers, and is listed in over 200 real estate, investment, and related industry user lists. We post new content available on REIT.com, live updates from meetings, news articles and other items of interest to the broader commercial real estate investment community.
NAREIT's increasingly large and well-respected social media presence serves as another important means of communicating the REIT story to a wide-ranging audience in the U.S. and abroad. We encourage you to use this to your advantage by not only connecting with us on Twitter and Facebook, but also by letting us share your news with our growing social media network.
If you have company news, upcoming events or media coverage that you would like us to disseminate to our followers, just let us know and we will spread the word.
(Contact: Emily Reid at ereid@nareit.com)
The March to REITWise
 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 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.
In addition to core sessions of interest, like SEC and Financial Standards Developments, Tax Planning for U.S. REITs Investing Abroad, The Treasury Speaks, and State of the Commercial Real Estate Markets, REITWise offers valuable roundtable sessions lead by engaging moderators.
Visit the REITWise 2012 home page for complete event information and online registration.
(Contact: Katelyn Rowland at krowland@nareit.com)
REIT.com Video: Henry Chamberlain, BOMA International
 Building owners are trying to anticipate what the tenant space of the future will look like, according to Henry Chamberlain, president and chief operating officer of the Building Owners and Managers Association (BOMA International).
"We've got this mobile world. People are working off of their PDAs or iPads and they don't need office space quite as much," Chamberlain said. "So you hear a lot of conversation about consolidating space needs, creating a different open workplace or leveraging technology in a variety of ways for remote teams to come together."
He said that the building owners who can figure out how to service those tenants first will create great brand recognition and value.
When it comes to policy and legislative issues, Chamberlain said that BOMA members gathered in Washington recently and took to Capitol Hill to ask lawmakers to support a number of commercial real estate issues. He said members are keeping a close eye on issues revolving around taxes, leasehold appreciation, brownfield development, carried interest and energy bills.
Chamberlain also discussed a new bill being proposed related to the Americans with Disabilities Act, which would allow property owners the opportunity to remedy situations before they are sued for not accommodating some form of a disability.
(Contact: Matt Bechard at mbechard@nareit.com)
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All NAREIT Corporate Member CEOs or their designated NAREIT Political Liaisons are invited to attend NAREIT's 2012 Washington Leadership Forum (WLF), which will be held Feb. 28 and 29 in Washington, D.C.
WLF provides an annual forum for REIT executives to meet with key policymakers to discuss the current state of the REIT and publicly traded real estate industry and to advocate for NAREIT's 2012 legislative agenda. This year's WLF participants will urge policymakers to continue to support, and improve, the REIT approach to real estate investment, especially as they consider future tax code or regulatory reforms.
Speakers at this year's event will include House Speaker John Boehner (R-OH), Washington Post columnist Ezra Klein and Treasury Deputy Secretary Neal Wolin.