Publicly traded real estate companies have become the pillars of good governance. Just take a look at Institutional Shareholder Services’ Corporate Governance Quotient rankings, REITs are at the top of the pack just a hair behind the utilities industry. REIT executives are also increasingly being lauded for their management skills. In the last few months alone, New Century Financial Corporation (NYSE: NEW) Chief Executive Officer Robert K. Cole was named the "most efficient CEO" in the May issue of Forbes magazine. Vornado Realty Trust (NYSE: VNO) Chairman and CEO Steven Roth was recognized as one of the world’s "30 most respected CEOs," according to Barron’s.

All of this positive recognition hasn’t happened by accident. The REIT industry has made bolstering corporate governance practices a priority and that can be seen by the improved individual company scores in ISS’ CGQ rankings. This stellar governance record combined with the industry’s sizable dividend yield and long-term total returns have made REITs an increasingly popular investment option among professional and retail investors alike.

However, while total returns and dividend yields are easily quantifiable numbers with direct bearings on shareholder interest, corporate governance is not so easily measured. In fact, several research studies have discussed how some of the best performing REITs are those considered to be below average in terms of governance practices. But whether or not the impact of governance on stock performance is immediate or longer term, the fact is that investors are increasingly looking at governance practices as one of the factors they consider when choosing asset allocations. This issue’s cover story examines the eight governance issues that matter most to investors.

Also In This Issue

While not a frequent occurrence, there are more companies looking outside the real estate industry when hiring upper-level executives. These "industry outsiders" are typically brought in for specific reasons and have unique perspectives on what it takes to run a successful REIT. "Bringing the Outside In" features some of these executives and looks at what it means for the industry and the companies that have made these moves.

If you take "A Look into the Future," you will see the impact nanotechnology will have on how real estate is used and how it is constructed. The initial implementation of this developing technology can already be seen in real estate and numerous other industries. Learn more about this "science of the small" as we shed some light on the possible industry impacts.

Matthew Bechard
Editor-in-Chief