John Good, partner and co-head of the REIT group at law firm Morrison Foerster, joined REIT.com for a video interview during REITWise 2014: NAREIT’s Law, Accounting and Finance Conference held in Boca Raton, Fla.
Good was asked to comment on the movement among a number of REITs to spin off portfolios of assets into separate companies. This occurred most recently when Vornado Realty Trust (NYSE: VNO) announced that it would spin off 81 strip shopping center assets and four malls from its portfolio into a new REIT.
Good explained that in the post-recession recovery environment, companies are examining their portfolios and their stock performance and realizing that there may be opportunities to create value for shareholders by focusing more closely on particular property types.
“While REITs have for many years been single property types, they’re becoming hyper-single property types now where anything that doesn’t really fit, either from a growth standpoint or from a quality standpoint, they need to move out and have their portfolio focused in a way that drives better growth, better share value,” Good said.
Good also discussed the most pressing issues concerning REITs and the Securities and Exchange Commission (SEC).
Good noted that despite some transition among the REIT group at the SEC, there has been an ongoing dialogue about financial metrics that are included in filings, non-generally accepted accounting principles (GAAP) measures and other related issues.
“I think that continues to be an issue as metrics change, as analysts start to slice and dice information differently. The ability to pull that kind of information into filings is going to always be a pressing issue,” he said.