REIT.com interviewed Venable partner James J. Hanks, Jr. on April 16, 2015 during the REITWise 2015: NAREIT’s Law, Accounting and Finance Conference. Hanks discussed the importance of succession planning and a likely uptick in mergers and acquisitions.
"I see it as a major item on a continuing basis, as it should be," said Hanks, discussing succession planning. Hanks advised a focus on short-term and long-term planning as well as a focus on all senior managers, not just the CEO.
On the topic of mergers and acquisitions, Hanks said he expects to see an increase in activity. "Any temporary downward pressure on REIT share prices related to rising interest rates is likely to create buying opportunities," he said adding that an increased focus on net asset value (NAV) makes it easier for investors to evaluate opportunities. At the same time, Hanks said the increased focus on NAV is one of the reasons for increased shareholder activism. "A lot of the activists are looking at that as a fairly easy metric to assess."
Given the current environment, Hanks emphasized the importance of REITs being well protected under the provisions of their statues and bylaws. This gives the board time to calmly assess an offer, according to Hanks. "I find it very disturbing that there’s this increased pressure from some small stockholders to opt out of the Maryland provisions that allow directors to take various actions to protect themselves."
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