CORPORATE GOVERNANCE TRENDS IN THE PUBLIC REIT SECTOR: AN EVOLVING LANDSCAPE 6 governance. Likewise, we do not recommend any particular set or subset of governance positions as a blunt instrument approach for all public REITs. Rather we recommend that the board of each public REIT regularly evaluate the company’s corporate governance profile in light of all relevant facts and circumstances to determine whether the profile is one that provides the board, in its business judgment, with the tools and flexibility to fulfill its overarching duty to maximize stockholder value over the long term. Not all REITs of all sizes, across all sectors and in all circumstances will best serve their stockholders by making identical choices in corporate governance. For example, while one REIT board may reasonably determine to retain its ability to employ certain takeover defenses in the face of an unsolicited coercive bid given a particular set of facts and circumstances, where the circumstances are different we have not hesitated to advise other REITs to consider affirmatively limiting the defensive tools that might otherwise be available to their boards (e.g., opting out of MUTA or implementing a restriction on the adoption of a “poison pill” without stockholder approval, etc.). SELECT CORPORATE GOVERNANCE DATA ACROSS THE REIT SECTOR To provide some color and context to REIT boards when undertaking this evaluation, in the table below we have listed an array of corporate governance metrics currently in use, under consideration and/or being monitored in the public REIT market today. All of these metrics are evaluated or noted in one form or another by Institutional Investor Services Inc. (“ISS”) in formulating its proprietary “QualityScore”.4 We have reviewed data on these metrics as of April, 2018 for each of the 152 REITs currently included in the MSCI US REIT Index (RMZ), and further subdivided the data by sub-industry as classified by the RMZ. In each row below, we show the percentage of REITs, both overall and by sub-industry, which have or have not adopted the relevant governance metric. Brief commentary on each metric follows the table. Subsector Averages All RMZ Average (152 companies) Retail (29) Residential (18) Industrial (9) Office (23) Hotel & Resort (18) Diversified (22) Specialized (16) Health Care (17) Board Structure Classified Board 17% 27% 0% 11% 17% 11% 22% 12% 24% Combined CEO and Chairman 45% 53% 47% 56% 30% 44% 43% 29% 59% Insiders on Board (other than CEO) 29% 33% 41% 44% 39% 39% 9% 24% 18% Percentage of Women on Board 13% 12% 13% 7% 16% 12% 14% 14% 12% Outside Directors with 6+ Years Tenure 44% 55% 41% 61% 39% 43% 35% 38% 46% Majority Voting and/or Director Resignation Policy 76% 83% 71% 67% 74% 94% 65% 65% 82% Shareholder Rights Current Shareholder Rights Plan 1.3% 7% 0% 0% 0% 0% 0% 0% 0% Restriction on Shareholder Rights Plan 14% 14% 6% 33% 17% 33% 14% 6% 0% Proxy Access (any formulation) 26% 17% 33% 33% 35% 33% 18% 18% 29% Supermajority Vote Required to Amend Charter 19% 24% 39% 22% 9% 6% 5% 11% 41% Stockholders May Amend Bylaws (any formulation) 63% 66% 72% 67% 57% 72% 50% 81% 71% Directors May Be Removed Only for Cause 57% 41% 56% 89% 70% 50% 65% 63% 47% Supermajority Vote Required to Remove Directors 60% 52% 61% 67% 70% 50% 61% 56% 71% Other Governance Require Stockholder Approval to Classify Board 47% 62% 33% 44% 43% 78% 41% 44% 41% Exclusive Forum Provision 36% 37% 35% 44% 44% 28% 39% 35% 29% Related Party Transactions with CEO 15% 20% 6% 11% 22% 33% 9% 12% 0% Related Party Transactions with Outside Directors 25% 17% 24% 11% 48% 17% 39% 24% 12% Dual Class Voting Structure 5% 10% 6% 0% 0% 6% 9% 6% 0% 4 ISS’s QualityScore focuses on the “qualitative aspects of governance, including global governance standards and alignment with ISS voting policy”. Companies receive an overall QualityScore and a score for each of ISS’ four “pillars”: Board Structure, Compensation/Remuneration, Shareholder Rights, and Audit & Risk Oversight.