Moderator:
Jamie Williams
The Carlyle Group
Speakers:
Dawn Becker
Federal Realty Investment Trust (FRIT)
Cathy Ward
Corporate Office Properties Trust (COPT)
Meredith Despins
National Association of Real Estate Investment Trusts (NAREIT)
The panelists discussed how the Real Estate Investment Trust (REIT) industry has fared since its creation in 1960. Congress created REITs in the US as vehicles to allow general consumers to invest in commercial real estate. REITs don’t pay corporate income taxes, but they are required to distribute 90 percent of their income through dividends to their investors. In addition, REITs must hold at least 75 percent of their assets as real property and 75 percent of their gross income must be generated through real estate.
The panelists also explained how REITs have dealt with today’s challenging market conditions. As a strategy for dealing with losses, some REITs have elected to cut dividends to the absolute minimum possible to retain their special tax status. Others have issued some portion of their dividends in the form of stock. But many REITS -- such as Federal Realty Investment Trust (FRIT) and Corporate Office Properties Trust (COPT) -- have managed the current economic challenges well. Meredith Despins noted that, in general, the REIT market has recovered strongly in the last year, raising (along with real estate operating companies) nearly $35 billion in 2009. COPT has remained successfully by focusing on its core client base of security and intelligence contractors along the Baltimore-Washington corridor. FRIT is concentrating on its centrally-located retail and mixed-use properties, such as Bethesda Row.
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