Semiannual Reporting Sparks Conundrum For REITs (Law360)

After the U.S. Securities and Exchange Commission on Tuesday unveiled a proposal to allow companies to make semiannual disclosures, attorneys who advise real estate investment trusts are skeptical that many REITs will opt for less frequent reporting. Smaller public companies especially may appreciate not having to make such voluminous filings. But large, established REITs are taking a cautious approach, according to Audrey Leigh, a partner at Goodwin. “I think they’re excited about the deregulatory aspect of this rule, but I don’t know if they would change anything in practice,” Leigh said. At least some companies are likely to welcome an opportunity to potentially save on time and cost of compliance. On the one hand, they may have less pressure from analysts accustomed to quarterly disclosures. That’s one reason David Roberts, a partner at Goodwin, said he could definitely see more adoption in the nontraded REIT space. “We have a number of nontraded REIT clients that don’t have analyst coverage, and the investors are investing from a long-term period and not worried about the vagaries of the market and quarter-by-quarter results, so I could definitely see the nontraded REITs jumping on this maybe quicker than the listed REITs,” Roberts said.

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