In a report by Barbara Shecter for the Financial Post
, Allied Properties REIT and Boardwalk REIT have started following the example set by Canada’s largest REIT, RioCan Real Estate Investment Trust, in providing opportunities for fairer treatment of unit holders, along with “dissent and appraisal” mechanisms that would permit investors to back out and ask for fair compensation in the event of major company changes.
The developments came in the wake of observations by the Canadian Coalition for Good Governance (CCGG) that pointed at the REITs’ lack of broad protections when compared to traditional corporations.
“CCGG believes that unit holders of REITs and other public business trusts should have the fundamental rights and remedies that are available to shareholders of public corporations,” coalition executive director Stephen Erlichman stated.
“We hope that other public trusts follow their lead,” Erlichman said of the REITs that have begun adopting the new protections.
Analysts noted that such moves towards policies that mirror those of corporations would allow REITs to reel in new participants.
“It would make a difference if you are trying to appeal to a broader base of investors,” National Bank
Financial equity research analyst Matt Kornack said. “I think the larger cap entities have increasingly moved towards best practices from a governance standpoint and others will likely follow suit.”
Amid increasing public pressure to raise standards, several Canadian REITs have started implementing updated remedies and procedures that would close existing gaps in investor protection as well as provide more options for dissatisfied unit holders.