Investing in the stock market this year has been a little like being a tadpole in a tidal wave. Even investors who held on to real estate stocks as a life raft couldn’t help but get a little wet in the deluge of corporate scandals and economic turmoil.

With hopes that dry land is within site, an increased scrutiny is being placed on corporate governance issues across all publicly traded industries. While there have been no disasters in the REIT sector, the competition and quality of a real estate company’s board of directors has become a major criteria investors look at when making investment decisions.

The perception still exists that REITs are run differently than their corporate America counterparts. While many real estate companies started as smaller, family-run operations, REITs have quickly evolved, and so too have their boards. Despite the significant prog ress over the last decade, there is still room for improve ment and for more independent directors.

In this issue’s cover story, “Direct Effect,” we explore how REIT boards measure up against other industries and how investor concerns and regulatory pressures are driving continued improvements.

Other Features

Despite lingering questions of accuracy and usefulness, net asset value (NAV) has become a tool many investors and analysts use to measure the relative value of real estate stocks. In “An Inexact Science,” we talk with leading investors and analysts to get their take on the relevance and role of NAV in their activities.

In the debut of Portfolio’s “Best Practices” column, NAREIT vice president of financial standards George Yungmann shares his thoughts on current calculating and reporting practices for NAV.

“Something Special” profiles four companies that occupy niche markets and comprise the specialty property market. While car dealerships, prisons, movie theaters and forests may not seem like markets for REITs, investors who overlook this sector are missing out on some unique investment propositions.

“Keeping an Eye on Insurance” looks at the state of the insurance market, availability of terrorism coverage and how companies are disclosing their risk exposure.

Matthew Bechard
Editor-in-Chief