U.S. REIT Information Desk - Investor Safety and Transparency

Investor Safety and Transparency

In the United States, listed REITs must file with the U.S. Securities and Exchange Commission (SEC), a regulatory body whose mission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.

According the the SEC, "the laws and rules that govern the securities industry in the United States derive from a simple and straightforward concept: all investors, whether large institutions or private individuals, should have access to certain basic facts about an investment prior to buying it, and so long as they hold it. To achieve this, the SEC requires public companies to disclose meaningful financial and other information to the public. This provides a common pool of knowledge for all investors to use to judge for themselves whether to buy, sell, or hold a particular security. Only through the steady flow of timely, comprehensive, and accurate information can people make sound investment decisions."

As with all other publicly traded companies in the U.S., REITs are required to make regular financial disclosures to the investment community. These include quarterly and yearly audited financial results with accompanying filings to the SEC.

The financial markets in the U.S. also have rules in place to protect investors. New U.S. stock exchange rules require that a majority of directors of a company to be independent of company management. New New York Stock Exchange (NYSE) and NASDAQ rules also call for fully independent audit, nominating and compensation committees. The stock exchanges also have rules on corporate governance.

There are also numerous independent performance benchmarks available for tracking the publicly traded REIT industry. A wide range of analyst reports are made available to the public. The ease with which interested parties can analyze and evaluate a REIT's operations has built confidence in the industry among investors.

The transparency of U.S. REITs also comes in the form of tax transparency. The distribution of most, if not all, of a company's taxable income to shareholders is a fundamental characteristic of U.S. REITs, and any REIT-like regime.