By Alfred Branch Jr.

With the unthinkable having become reality, real estate companies know having a reliable crisis management plan in place is now part of business as usual.

“The object is to communicate your message, as much as you can relate, as quickly as possible. Consistency is critical when dealing with any crisis."

There was no way anyone could have been prepared for the tragic acts that occurred on September 11 or the uncertain and often difficult times that followed. But as horrific as the events were, property owners and managers have been preparing for worst-case scenarios for years by developing detailed crisis management plans.

In essence, crisis management plans are the blueprints for how a company would deal with an emergency or other significant incident that affects the reputation, credibility, operations or viability of an organization, as well as the safety of employees, tenants or other individuals. A crisis affecting a real estate company could be anything from financial (earnings shortfall) to physical (natural disasters) to legislative (environmental liability) in nature.

A successful crisis management plan takes into account all of the constituencies that might need to be addressed: investors, tenants, employees, legislators, community groups and the media. It is crucial that a publicly traded real estate company have a plan in place that they are familiar with in order to respond efficiently and effectively as soon as possible after a crisis strikes in order to limit the escalation of concern among all parties involved.

Eight Key Principles of Crisis Communication While the exact nature of any critical situation can vary widely and affect a diverse group of publicly traded real estate company stakeholders (investors, tenants, residents, employees, etc.), here are eight primary principles that need to be observed whenever a crisis strikes.
1	Define the real problem, both short and long term
2	Centralize and control the information flow into and out of the company
3	Plan for the “worst case” scenario
4	Contain the problem
5	Identify a crisis team
6	Resist combative instincts
7	Understand the media
8	Consider all constituencies
Source: Crisis Management Plan for REITs and Publicly Traded Real Estate. For information about purchasing a full copy of the report, call 202-739-9447.

“A crisis management plan is important for any company, whether it is public or private,” says Al Orendorff, vice president of the public relations firm FRB/Weber Shandwick. “Companies, especially real estate companies, need to think of crisis management plans as part of the overall brand management strategy for their business. All the pieces need to fit in an integrated effort.”

Plans in Place

Fortunately for most real estate owners, the plans they had in place prior to last fall held up in the face of the terrorist attacks and remain their crisis management plans today because they did the legwork and preparation months or years in advance.

Washington Real Estate Investment Trust re-evaluated its crisis management plan following September 11 and found that instead of wholesale changes it only needed to make some refinements, says Sara Grootwassink, managing director for finance and capital markets. In addition to an increased number of drills to test its preparedness, Washington REIT also altered its plans to prepare for the possibility of chemical or biological terrorism.

“Constantly re-evaluating our plan is important. By being pro-active, we feel we’ll be better able to stay on top of any situation,” Grootwassink says.

BRE Properties, Inc. also found its crisis management plan has held up because it took the time to revise the plan. “We had taken steps to review and revise our crisis management plan two years prior to September 11, and had hired an outside consultant to do so,” says Lee Carlson, chief operating officer of San Francisco-based BRE Properties. “It’s really part of the mission of our company. We consider ourselves a family, and life safety issues and doing the right thing are very important to us.”

In addition to evacuation and building operation plans, BRE Properties established a toll-free crisis hotline for tenants to receive information in the event of any tragedy. The company also offers trauma counseling to its employees.

“You hope you never have to use it,” Carlson says, referring to the company’s crisis management plan. “But after September 11, it just reinforces how important it is to stay on top of it.”

Put to the Test

For those companies directly impacted by the September terrorist attacks, their crisis management plans were put to the ultimate test—and for the most part scored very high marks. With several properties near Ground Zero, Brookfield Properties Corporation knew that it would be called upon extensively for information from not only the news media but also shareholders trying to determine the impact to the company’s bottom line. In order to handle the deluge of information requests, Brookfield created a section on its web site focused on gathering and disseminating information to all interested parties.

“The object is to communicate your message, as much as you can relate, as quickly as possible,” says Katherine Vyse, senior vice president of investor relations and communications for Brookfield. “Consistency is critical when dealing with any crisis.”

“Our crisis management plan is being further reviewed, but we’re really only looking at refinements to it. We think it held up well,” says Melissa Coley, vice president of investor relations and communications for Brookfield.

Coley says the plan worked in part due to a move Brookfield’s security director Ralph Blasi made two years prior. At the time, Brookfield and other building owners in the area around the World Trade Center in New York expected to use a single public atrium and courtyard, the Winter Garden, for evacuation purposes. The area can hold about 3,000 people, but Brookfield’s four buildings alone in lower Manhattan hold more than 40,000 workers when at capacity. Recognizing the potential danger, Blasi helped change the evacuation procedure and undoubtedly saved lives on September 11, Coley says.

Communication Is Key

Regardless of the situation being faced, one of the most critical components of a crisis management plan is how the company communicates with the news media and investment community.

Michael Beckerman, president of Beckerman Public Relations, says one of his firm’s top priorities is working with real estate companies to outline the communications aspect of their crisis management plans.

Beckerman says that September 11 was a prime example that managing corporate communications during a crisis or emergency is not just a local event but can be a much bigger entity because of the sheer global nature of some catastrophic situations.

In addition, every company should have a clear understanding of which employees will be allowed to give official statements, and those individuals should be properly trained on how to interact with the media.

Brookfield Properties has designated only a couple of people who are allowed to speak for the company in the event of a crisis or for any investor news or other official company statements. “It’s important to centralize communications as quickly as possible,” Vyse says.

BRE has taken a similar approach to Brookfield, allowing only specific employees in each region where the company operates to talk to the news media. “We believe that the appropriate response to the media should come from representatives who are local. We tell our people that if they don’t know the answer to a question, simply say that they don’t know,” Carlson says. “Telling the truth is crucial.”

Orendorff’s firm handles PR for several REITs and he agrees that reporting potentially negative news before the information is leaked can help a company avoid a loss of credibility. “Put the public interest first and provide a realistic appraisal of the situation, whatever it is,” he says. “You have investors to think about, not only current ones but also future ones.”

So even though day-to-day operations of a publicly traded real estate company often take precedent, Orendorff stresses that if a company cannot handle a crisis, the other factors become almost trivial. “REITs need to think about a crisis before it happens. Being prepared, knowing what to do and carrying it out will save a business in the event of an emergency,” he says.