Market Consultation
October 2014

FTSE NAREIT US Real
Estate Index Series
Market Consultation

Overview
FTSE and NAREIT are inviting all market participants and interested
parties to participate in a consultation regarding proposed changes anddiscussion questions with respect to the FTSE NAREIT US Real Estate
Index Series. We strive to achieve the highest possible standards withrespect to index design, representation and calculation.
The purpose of the consultation is to allow market participants tounderstand and respond to a number of proposed changes and tocomment with respect to a number of discussion questions.
Your comments will assist FTSE and NAREIT in making any final
decisions or changes to the Index Series. This consultation may or may
not result in any changes to the Index Series.
The consultation will close on 31 October 2014.

Contents
I. Background
II. Previous index consultations
III. Structure and definitions
IV. Summary of proposals and Discussion Questions
V. Proposals in detail
VI. Summary of discussion questions
VII. Discussion questions in detail

How to respond to the consultation
If you would like to participate in this consultation, visit
http://www.ftse.com/products/indices/NAREIT.
For questions or comments, please contact us at annie.evangeli@ftse.com.
The consultation will close on 31 October 2014.

2

I.

Background
January 1972 – The NAREIT Share Price Index, the originatingpredecessor to the FTSE NAREIT US Real Estate Index Series, was first
calculated and introduced by NAREIT as a monthly index of listed REIT
share prices beginning January 1972 with a base date of December
1971.
January 1979 – NAREIT introduced the NAREIT Total Return Index asa monthly index of listed REIT share total returns.
January 1999 – The NAREIT Indexes increased the calculation
frequency from monthly to daily, with real time price returns calculated
throughout the trading day.
March 2006 – FTSE Group assumed responsibility for the calculationand dissemination of the FTSE NAREIT US Real Estate Index Series, andGround Rules for the Management of the FTSE NAREIT US Real Estate
Index Series were published governing the construction andmethodology of the Index.
March 2010 – FTSE and NAREIT established the FTSE NAREIT US Real
Estate Index Advisory Committee. The Committee provides valuable
market perspective to ensure that the Index Series accurately represents
the composite investment characteristics of stock exchange-listed REITs
in the U.S.
December 2010 – FTSE and NAREIT restructured the Investment
Sector indexes of the FTSE NAREIT US Real Estate Index Series toinclude the FTSE NAREIT All Equity REITs Index, the FTSE NAREIT
Equity REITs Index, and the FTSE NAREIT Mortgage REITs Index. The
FTSE NAREIT All Equity Timber Index was instituted as a new property
sector to include all Equity REITs designated as timber REITs and was
instituted as part of the FTSE NAREIT All Equity REITs Index.
January 2012 – The FTSE NAREIT All Equity Infrastructure REITs
Index was created as a new property sector to include all equity REITs
designated as infrastructure REITs and was instituted as part of the
FTSE NAREIT All Equity REITs Index.
October 2012 – FTSE and NAREIT modify the Ground Rules for theManagement of the FTSE NAREIT US Real Estate Index Series to provide
a minimum investable market capitalization for the creation of new
property sectors.
3

II.

Previous Index Consultations
In December 2010 – FTSE and NAREIT implemented the followingchanges to the FTSE NAREIT US Real Estate Index Series:

III.



The existing FTSE NAREIT Equity REITs Index was re-designatedthe FTSE NAREIT All Equity REITs Index.



The FTSE NAREIT Equity REITs Index was re-introduced toinclude all Equity REITs not designated as timber REITs.



The FTSE NAREIT Hybrid REITs Index was discontinued.



The FTSE NAREIT Equity Specialty Index was discontinued.
Existing constituents of the FTSE NAREIT Equity Specialty Index
were included in the FTSE NAREIT Equity Diversified Index,
which now includes all equity REITs that do not meet the criteriaof another property sector.



The FTSE NAREIT All Equity Timber Index was instituted as partof the FTSE NAREIT All Equity REITs Index and includes all
equity REITs designated as timber REITs

Current Structure of the FTSE NAREIT US Real Estate
Index Series
3 Headline Indexes:FTSE NAREIT All REITs Index (FNAR)FTSE NAREIT Composite Index (FNCO)
FTSE NAREIT Real Estate 50 Index (FNR5)

3 Investment Sector Indexes:FTSE NAREIT All Equity REITs Index (FNER)FTSE NAREIT Equity REITs Index (FNRE)
FTSE NAREIT Mortgage REITs Index (FNMR)The FTSE NAREIT All Equity REITs Index includes 9 Property Sectors
and 8 Subsectors.

4

The FTSE NAREIT Equity REITs Index includes 7 Property Sectors and
8 Subsectors (excludes property sectors for timber REITs andinfrastructure REITs).
The FTSE NAREIT Mortgage REITs Index includes 2 Property Sectors –Home Financing and Commercial Financing.
FTSE NAREIT US Real Estate Index Series: Classification Structure
Headline Indices
FTSE
NAREITALL REITS(FNAR)FTSE
NAREIT
Real Estate50(FNR5)FTSE
NAREIT
Composite(FNCO)

Investment
Sector

Property
SectorAll Equity
REITs(FNER)

Equity Diversified (FN10)

Property
Subsector

Equity Health Care (FN11)
Equity Self Storage (FN12)
Equity Industrial/Office (FN13)

Equity Industrial (FN14)
Equity Office (FN15)
Equity Mixed (FN16)

Equity Residential (FN17)

Equity Apartments (FN18)
Equity Manufactured Homes(FN19)

Equity Retail (FN20)

Equity Shopping Centers (FN21)
Equity Regional Malls (FN22)
Equity Free Standing (FN23)

Equity Lodging/Resorts (FN24)
Timber REITs (FN26)
Infrastructure REITs (FN28)
Mortgage
REITs(FNMR)

Mortgage Home Financing (FN42)

EquityREITs(FNRE)

Equity Diversified (FN10)

Mortgage Commercial Financing(FN43)

Equity Health Care (FN11)
Equity Self Storage (FN12)
Equity Industrial/Office (FN13)

Equity Industrial (FN14)
Equity Office (FN15)
Equity Mixed (FN16)

Equity Residential (FN17)

Equity Apartments (FN18)

Equity Retail (FN20)

Equity Manufactured Homes(FN19)
Equity Shopping Centers (FN21)
Equity Regional Malls (FN22)
Equity Free Standing (FN23)

Equity Lodging/Resorts (FN24)

5FTSE NAREIT US Real Estate Index Series: Sector and Subsector Definitions
Property Sectors and Subsectors

Definition

Equity REITs

REITs that mostly own, manage and lease income-producing real estate.

Industrial/Office

REITs that mostly own, manage and lease office properties, industrial properties
and flex properties.

Industrial

REITs that mostly own, manage and lease industrial properties, including
warehouses, distribution centers, research and development properties, flex
properties and light-manufacturing properties.

OfficeREITs that mostly own, manage and lease office properties.

Mixed

REITs that mostly own, manage and lease office properties, industrial properties
and flex properties.

Residential

REITs that mostly own, manage and lease residential properties, including
apartment properties, manufactured home communities and student housing
properties.

Apartments

REITs that mostly own, manage and lease apartment properties andstudent housing properties.

Manufactured Homes

REITs that mostly own, manage and lease manufactured home communities.

RetailREITs that mostly own, manage and lease retail properties, including
neighborhood shopping centers, regional malls, factory outlet centers andsingle-tenant free-standing properties.

Regional Malls

REITs that mostly own, manage and lease large-scale regional shopping malls.

Shopping Centers

REITs that mostly own, manage and lease neighborhood shopping centers andfactory outlet centers.

Freestanding

REITs that mostly own, manage and lease single-tenant, free-standing properties.

Diversified

REITs that mostly own, manage and lease income-producing real estate but do not meet the
75 percent gross invested book assets threshold of any single property sector.

Health Care

REITs that mostly own and lease health care properties, including hospitals,
skilled nursing facilities, senior housing communities, assisted living facilities,
medical office buildings and rehabilitation centers.

Self Storage

REITs that mostly own, manage and lease self storage properties.

Lodging/Resorts

REITs that mostly own and lease hotels and lodging properties.

TimberREITs that mostly own and manage timberlands and timber-related products andreal estate activities.

Infrastructure

REITs that mostly own, manage and lease infrastructure assets, includingtransportation assets (roads, bridges, tunnels, etc.), energy and utility assets(power generation, fuels, pipelines, etc.), water and waste management assets
and communication assets (line-based networks, air-based networks, etc.).

Mortgage REITs

REITs that mostly provide debt financing for existing single-family housing andcommercial real estate by investing in single-family and commercial mortgages
and single-family and commercial mortgage-backed securities.

Home Financing

REITs that mostly provide debt financing for existing single-family housing byinvesting in single-family mortgages and single-family mortgage-backed securities(RMBS).

Commercial Financing

REITs that mostly provide debt financing for existing commercial real estate byinvesting in commercial mortgages and commercial mortgage-backed securities(CMBS).

6

IV.

Summary of Proposals
1.

Proposal to institute a Specialty property sector.

2.

Proposal to change the definition of the Diversified property sector.

3.

ProposaltochangetheIndustrial/Office property sector.

classification

structure

of

the

4.

Proposal to change the definition of the Residential property sector
to include single-family housing REITs.

5.

Proposal to change the definition of the Industrial/Office property
sector to include data center REITs.

Summary of Discussion Questions

V.

A.

Should the FTSE NAREIT Equity REITs Index (FNRE) be further
differentiated from the FTSE NAREIT All Equity REITs Index (FNER)?

B.

Should the classification structure be changed to institute a Net
Lease property sector?

C.

Should rule 4.9 (New Property Sector Entry Rule) of the Ground
Rules for the Management of the FTSE NAREIT US Real Estate IndexSeries be amended?

Proposals in Detail
1. Proposal to Institute a Specialty Property Sector
Rationale for the proposal:
From time to time, companies that own, manage and lease assets
primarily in a single property sector that is not part of the current
classification structure become eligible constituents of the FTSE NAREITUS Real Estate Index Series and are classified in the Diversified property
sector. Such property sectors have included timber, data centers,
prisons, movie theaters, single-family houses and potentially others.
Thus, the Diversified property sector may include companies that are
not typically considered diversified REITs. As of August 28, 2014, there
were 24 companies in the Diversified property sector of the FTSE
7

NAREIT Composite Index (FNCO) with a combined investable market
capitalization of $62.4 billion that own, manage and lease assets
primarily in a single property sector that is not part of the current
classification structure.
Proposed definition of a Specialty property sector:
REITs that mostly own, manage and lease assets primarily in a single
property sector currently not part of the classification structure andthat do not meet the 75 percent gross invested book assets thresholdof any other property sector.

Discussion topics:
1. Is there a clear and compelling rationale for not classifying
companies that own, manage and lease assets primarily in asingle property sector that currently is not part of theclassification structure in a separate and distinct property sector
apart from the Diversified property sector?
o

Yes

o

No

o

Comment box

2. Is “Specialty” the most appropriate name for such a separate
and distinct property sector?
o

Yes

o

No

3. If not, what other property sector names would be more
appropriate?
oComment box

8

2. Proposal to Change the Definition of the Diversified
Property Sector
Rationale for the proposal:
Diversified REITs most often have been viewed by investors as thosecompanies that own, manage and lease substantial proportions of theirassets across two or more property sectors, most often office, industrial,
retail and residential. Under the current classification structure, theDiversified property sector is defined to include companies that own,
manage and lease income-producing real estate but do not meet the
75 percent gross invested book assets threshold of any single property
sector. Currently, this definition includes companies that own, manage
and lease assets primarily in a single property sector that is not partof the classification structure because it does not meet the five percent
minimum property sector investable market capitalization threshold ofRule 4.9 of the Ground Rules for the Management of the FTSE NAREITUS Real Estate Index Series. Thus, the Diversified property sector may
include companies that are not typically considered diversified REITs.
Proposed definition of the Diversified property sector:
REITs that mostly own, manage and lease substantial proportions of
their assets across two or more property sectors, of which none meetthe 75 percent gross invested book assets threshold of any single
property sector.
Discussion topics:

4. Is there a clear and compelling rationale for maintaining a
Diversified property sector?
o

Yes

o

No

o

Comment box

5. Is there a clear and compelling rationale to modify the current
classification structure by discontinuing the Diversified property
9sector and classifying diversified REITs in one of the existing
property sectors based on a plurality of gross invested bookassets rather than classifying diversified REITs in a separate anddistinct Diversified property sector apart from all other property
sectors?
o

Yes

o

No

o

Comment box

6. Should the Diversified property sector be maintained but thedefinition of the Diversified property sector be further modified toinclude only those companies that own, manage and lease
substantial
proportionsof
theirassetsacrosstheIndustrial/Office, Retail and Residential property sectors, thereby
creating a more narrowly defined Diversified property sector?
o

Yes

o

No

o

Comment box

7. If the Diversified property sector is more narrowly defined, howshould companies no longer eligible for the Diversified property
sector be classified?
oComment box

3. Proposal to Change the Classification Structure of theIndustrial/Office Property Sector
Rationale for the proposal:
The Industrial/Office property sector currently has three distinct
property subsectors – Industrial, Office and Mixed. A company isclassified in the Industrial or Office property subsector if 75 percent ormore of its gross invested book assets is invested in industrial or officeproperties, respectively. A company is classified in the Mixed property
subsector if it fails to qualify for either the Industrial or Office property
subsector. Such companies typically own, manage and lease substantial
proportions of their assets across office, industrial and flex properties,
but do not meet the 75 percent threshold for either office properties or10

industrial properties. As of August 28, 2014, there were six companies in
the Mixed property subsector of the FTSE NAREIT Composite Index(FNCO) with a combined investable market capitalization of $15.9 billion.
Proposed classification
property sector:

structureoftheIndustrial/Office

Both the Industrial property subsector and the Office property
subsector would be elevated to separate and distinct property sectors.
The Mixed property subsector would be discontinued, and current
constituents of the subsector would be classified in either the Industrial
property sector or the Office property sector on the basis of theplurality of their gross invested book assets.
Discussion topics:
8. Is there a clear and compelling rationale for continuing thecurrent classification structure of the Industrial/Office property
sector and the Mixed property subsector?
o

Yes

o

No

o

Comment box

9. Are there substantive reasons to expect that the number of listed
REITs classified in the Mixed property subsector will appreciably
increase in the future?
o

Yes

o

No

o

Comment box

10. Should companies currently classified in the Mixed property
subsector be reclassified in the Diversified property sector rather
than in either the proposed Industrial property sector or the
proposed Office property sector on the basis of the plurality of
their gross invested book assets?
o

Yes

o

No
11

o

Comment box

11. If companies currently classified in the Mixed property subsector
are reclassified in either the proposed Industrial property sector
or the proposed Office property sector, should the classification
criteria be based on a measure other than a plurality of theirgross invested book assets?
o

Yes

o

No

o

Comment box

4. Proposal to Change the Definition of the Residential
Property Sector to Include Single-Family Housing
REITs
Rationale for the proposal:
A number of REITs focused on the ownership, management and rentalof single-family houses have become eligible for the FTSE NAREIT US
Real Estate Index Series. As of August 28, 2014, there were four singlefamily housing companies in the FTSE NAREIT Composite Index (FNCO)
with a combined investable market capitalization of $4.7 billion. Under
Rule 4.9 of the Ground Rules for the Management of the FTSE NAREITUS Real Estate Index Series, the combined investable market
capitalization of the four companies does not currently reach thethreshold required to institute a new property sector. Thus, thecompanies currently are classified in the Diversified property sector.
Proposed definition of the Residential property sector:
REITs that mostly own, manage and lease residential properties,
including apartment properties, manufactured home communities,
student housing properties and single-family housing properties.

Discussion topics:
12. Is there a clear and compelling reason to not include singlefamily housing REITs in the Residential property sector?

12

o

Yes

o

No

o

Comment box

13. Until such time as the combined investable market capitalizationof all single-family housing REITs meets the requirement of Rule4.9 of the Ground Rules for the Management of the FTSE
NAREIT US Real Estate Index Series and a separate and distinct
property sector for single-family housing REITs is warranted,
should single-family housing REITs remain classified in the
Diversified property sector rather than the Residential property
sector?
o

Yes

o

No

o

Comment box

14. Is there a clear and compelling reason to include single-family
housing REITs in a Specialty property sector rather than the
Residential property sector if a Specialty property sector isinstituted as proposed in Proposal 1?
o

Yes

o

No

o

Comment box

15. If single-family housing REITs are included in the Residential
property sector, should a Single-Family Housing property
subsector also be created?
o

Yes

o

No

o

Comment box

13

5. Proposal to Change the Definition of theIndustrial/Office Property Sector to Include Data
Center REITs
Rationale for the proposal:
In recent years, a number of REITs focused on the ownership,
management and rental of data centers have become eligible for the
FTSE NAREIT US Real Estate Index Series. As of August 28, 2014, there
were four data center companies in the FTSE NAREIT Composite Index(FNCO) with a combined investable market capitalization of$12.4 billion. Under Rule 4.9 of the Ground Rules for the Managementof the FTSE NAREIT US Real Estate Index Series, the combined
investable market capitalization of the five companies does not currently
reach the threshold required to institute a new property sector. Thus,
the companies currently are classified in the Diversified property sector.
Proposed definition of the Industrial/Office property sector(if Proposal 3 is not adopted):
REITs that mostly own, manage and lease office properties, industrial
properties, flex properties and data center properties.

Proposed definition of(if Proposal 3 is adopted):theIndustrial

property

sectorREITs thattopics:
mostly own, manage and lease industrial properties,
Discussion
including warehouses, distribution centers, data centers, research anddevelopment properties and light-manufacturing properties.

16. Is there a clear and compelling reason to not include data center
REITs in the Industrial/Office property sector (if Proposal 3 is not
adopted) or to not include data center REITs in the Industrial
property sector (if Proposal 3 is adopted)?
o

Yes

o

No

o

Comment box

1417. Until such time as the combined investable market capitalizationof all data center REITs meets the requirement of Rule 4.9 of the

Ground Rules for the Management of the FTSE NAREIT US Real
Estate Index Series and a separate and distinct property sector
for data center REITs is warranted, should data center REITs
remain classified in the Diversified property sector rather than bereclassified in the Industrial/Office property sector (if Proposal 3
is not adopted) or in the Industrial property sector (if Proposal 3
is adopted)?
o

Yes

o

No

o

Comment box

18. Is there a clear and compelling reason to include data center
REITs in a Specialty property sector rather than in the
Industrial/Office property sector (if Proposal 3 is not adopted) orin the Industrial property sector (if Proposal 3 is adopted) if a
Specialty property sector is instituted?
o

Yes

o

No

o

Comment box

19. If Proposal 3 is not adopted and data center REITs are includedin the Industrial/Office property sector, should a Data Center
property subsector also be created?

VI.

o

Yes

o

No

o

Comment box

Discussion Questions in Detail
A. Should the FTSE NAREIT Equity REITs Index (FNRE)
be further differentiated from the FTSE NAREIT All
Equity REITs Index (FNER)?

15

Rationale for the discussion question:
In recent years, the constituent profile of the FTSE NAREIT US Real
Estate Index Series has become more diverse, reflecting the many ways
in which real estate serves and supports the needs of a dynamic andevolving economy. Importantly, this diversity is not new. The constituent
profile of the FTSE NAREIT All REITs Index (FNAR) has evolved overtime, with some property sectors expanding while others contract andnewly instituted sectors entering while others drop out.
The evolution of constituents is representative of the evolution of theuse of real estate in the economy. These changes may pose challenges
for some investment managers or investment product sponsors whobenchmark their funds to one or more of the indexes within theclassification structure of the FTSE NAREIT US Real Estate Index Series.
For example, the REIT investment mandates of some institutional
managers may be appreciably narrower than the breadth of theconstituent profile of FNAR and even FNER. Some managers believe thatthe operating revenues and investment returns of companies operating
in property sectors outside of their mandates are affected by economic
and financial factors appreciably different from the economic andfinancial factors affecting the operating revenues and investment returnsof companies operating in property sectors within their mandates. Inturn, they believe that the risk and return profile of companies operating
in property sectors outside of their mandates is significantly different
from the risk and return profile of companies operating in property
sectors within their mandates. Combining companies both within andoutside their mandates in the same investment performance benchmark,they believe, may diminish the utility and value of such a benchmark fortheir investment management purposes.
This challenge also is not new and echoes the emergence of health care
REITs in the late 1980s. Because the investment profile of health care
REITs was viewed by some investment managers at the time as being
significantly different from the investment profile of other equity REITs,
NAREIT for some years calculated both an index that included all equity
REITs and a separate and distinct index that included all equity REITs
but excluded health care REITs. As the equity market capitalization ofhealth care REITs grew over time and became more widely followed,
investment managers generally became increasingly comfortable
including health care REITs within their investment mandates and thedistinction between health care REITs and other equity REITs in theview of investors diminished. By 2000, the separate index for equity
REITs excluding health care REITs had been discontinued.

16

To better manage the diversity of the constituent profile of the FTSE
NAREIT All Equity REITs Index (FNER), FTSE and NAREIT in December
2010 instituted the FTSE NAREIT Equity REITs Index (FNRE) as an
Investment Sector Index, which today excludes companies designatedas timber REITs or infrastructure REITs. However, the constituent profile
of FNER today is even more diverse and could continue its evolving
diversity in the months and years ahead. To manage the FTSE NAREITUS Real Estate Index Series in a useful and disciplined manner thatappropriately accounts for such evolving diversity, FTSE and NAREIT
invite comments with respect to the following discussion topic.
Discussion topic:
20. Are there other types of REITs in addition to timber REITs andinfrastructure REITs that should be excluded from the FTSE
NAREIT Equity REITs Index?
o

Yes

o

No

o

Comment box

B. Should the Classification Structure be changed toInstitute a Net Lease Property Sector?
Rationale for the discussion question:
In recent years, the number and total equity market capitalization ofcompanies that own, manage and lease property partly or mostly underterms of triple net leases have increased. These companies lease theirproperties, including primarily single-tenant, free standing retailproperties but also other properties, over long lease periods during
which tenants are responsible for rent as well as some or all property
expenses. Companies leasing a substantial proportion of their properties
under terms of triple net leases may exhibit an appreciably different risk
profile compared with companies that do not primarily use triple net
leases. Thus, it may be useful and appropriate to combine suchcompanies into a separate and distinct property sector rather thanhaving them dispersed across other property sectors.
Currently, some companies using triple net leases are classified in the
Retail – Free Standing property subsector, while others are classified ina number of other property sectors. One approach to addressing this17

question would be to institute a separate and distinct Net Lease property
sector that combines companies with substantial exposure to triple net
leases from the Retail – Free Standing property subsector and one ormore other property sectors. Companies leasing a substantial proportionof their properties, however measured, using triple net leases would beclassified in a Net Lease property sector.
Discussion topics:
21. Are there clear and compelling reasons for instituting a Net Lease
property sector and discontinuing the Retail – Free Standing
property subsector at this time?
o

Yes

o

No

o

Comment box

22. Are there clear and compelling reasons for instituting a Net Lease
property sector but continuing the Retail – Free Standing
property subsector at this time?
o

Yes

o

No

o

Comment box

23. If a Net Lease property sector is instituted, how should thesector be defined? Would the sum of gross invested book assets
for all properties leased under terms of a triple net lease serve as
an appropriate metric for identifying companies as constituentsof the sector, and would sufficient information be available fromcompany financial statements or other documents to determine
the proportion of a company’s properties that are leased underterms of a triple net lease?
o

Yes

o

No

o

Comment box

1824. Should changing the classification structure to institute a Net
Lease property sector be delayed at this time but considered in
the future?
o

Yes

o

No

o

Comment box

25. If the Retail – Free Standing property subsector is continued,
should the name be changed to Retail – Single Tenant?
o

Yes

o

No

o

Comment box

26. If not Retail − Single Tenant, what other subsector name mightmore appropriately to describe companies currently classified in
Retail − Free Standing?
oComment box

C. Should Rule 4.9 of the Ground Rules for theManagement of the FTSE NAREIT US Real Estate
Index Series be amended?

Rationale for the discussion question:
Companies that own, manage and lease assets primarily in a single
property sector that is not part of the current classification structure
may still become eligible constituents of the FTSE NAREIT US Real
Estate Index Series and are classified in the Diversified property sector.
Thus, the Diversified property sector from time to time may include
companies that are not typically considered diversified REITs. Rule 4.9(New Property Sector Entry Rule) of the Ground Rules for theManagement of the FTSE NAREIT US Real Estate Index Series governs
the entry of new property sectors into the classification structure.
Specifically, paragraph 4.9.1 of Rule 4.9 states,“For a new property sector to be created and included in the

FTSE NAREIT US Real Estate Index Series, it must have a minimum
19sector level weight greater than 5% of the FTSE NAREIT All Equity
REITs Index by investable market capitalization.”
To provide added flexibility to Rule 4.9 for instituting new property
sectors into the classification structure in a timelier manner, Rule 4.9
could be amended to include independent thresholds with respect to aminimum number of companies or a minimum investable market
capitalization.
Discussion topics:
27. Should Rule 4.9 be amended to include independent thresholdswith respect to both a minimum number of companies and aminimum investable market capitalization for instituting newproperty sectors into the classification structure?
o

Yes

o

No

o

Comment box

28. If yes, what is a useful and appropriate minimum number?
oComment box

29. Is there a clear and compelling rationale for raising or lowering
the five percent minimum property sector investable market
capitalization threshold required by Rule 4.9 to add new property
sectors to the classification structure?
o

Yes

o

No

o

Comment box

30. If Rule 4.9 is amended to include thresholds with respect to botha minimum number of companies and a minimum investable
market capitalization, should the rule require that boththresholds be jointly satisfied or that only one of the two
thresholds be satisfied before instituting new property sectors?
o

Yes

20

o

No

o

Comment box

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NAREITNAREIT is the worldwide representative voice for REITs and listed real estate companies with an interest in U.S. real estate and capital markets.
Members are REITs and other businesses that own, operate and manage income-producing real estate, as well as those firms and individuals who
advise, study and service those businesses. NAREIT is the exclusive registered trademark of the National Association of Real Estate Investment
Trusts, Inc.®, 1875 I St., NW, Suite 600, Washington, DC 20006-5413. Follow us on REIT.com.
Copyright© 2014 by the National Association of Real Estate Investment Trusts, Inc.® All rights reserved.
This information is solely educational in nature and is not intended by NAREIT to serve as the primary basis for any investment decision. NAREIT
is not acting as an investment adviser, investment fiduciary, broker, dealer or other market participant, and no offer or solicitation to buy or sell
any security or real estate investment is being made. Investments and solicitations for investment must be made directly through an agent,employee or representative of a particular investment or fund and cannot be made through NAREIT. NAREIT does not allow any agent, employee
or representative to personally solicit any investment or accept any monies to be invested in a particular security or real estate investment.
All REIT data are derived from, and apply only to, publicly traded securities. While such data are believed to be reliable when prepared orprovided, such data are subject to change or restatement. NAREIT does not warrant or guarantee such data for accuracy or completeness, andshall not be liable under any legal theory for such data or any errors or omissions therein. See http://reit.com/TermsofUse.aspx for important
information regarding this data, the underlying assumptions and the limitations of NAREIT’s liability therefore, all of which are incorporated byreference herein.
Performance results are provided only as a barometer or measure of past performance, and future values will fluctuate from those used in theunderlying data. Any investment returns or performance data (past, hypothetical or otherwise) shown herein or in such data are not necessarily
indicative of future returns or performance.
Before an investment is made in any security, fund or investment, investors are strongly advised to request a copy of the prospectus or otherdisclosure or investment documentation and read it carefully. Such prospectus or other information contains important information about asecurity’s, fund’s or other investment’s objectives and strategies, risks and expenses. Investors should read all such information carefully before
making an investment decision or investing any funds. Investors should consult with their investment fiduciary or other market professional before
making any investment in any security, fund or other investment.

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