Since the 1990s, Real Estate Investment Trusts (“REITs”) have gained considerable traction as an investment vehicle due to their significant tax advantages. With those advantages, however, come complex compliance requirements under Internal Revenue Code Sections 856 and 857. Adding to the complexity, with the proposed SEC rules for Climate-related Disclosures requirements, REITs will have to disclose information about their climate-related risks, governance, and management processes.
As a result, environmental, social and governance (“ESG”) and Corporate social responsibility (“CSR”) are the fastest growing segments in asset management today, as REITs need a way to measure and report for SEC compliance.
Developing a strategy for reporting around ESG and sustainability will be crucial for REITs to gain a competitive advantage, mitigate its risks and exposure, and improve the financial performance and investment attractiveness to investors. Factors most frequently considered in companies’ CSR and ESG policies include:
| Environmental |
Social |
Governance |
| Energy Consumption |
Diversity, Equity and Inclusion |
Quality of Management |
| Pollution |
Child and Forced Labor |
Board Independence |
| Climate Change |
Comminity Engagement |
Conflicts of Interest |
| Waste Production |
Health and Safety |
Executive Compensation |
| Natural Resource Preservation |
Stakeholder Returns |
Transparency and Disclosure |
| Animal Welfare |
Employee Relations |
Shareholder Rights |
Real Estate Services is a cornerstone practice at EisnerAmper. EisnerAmper has an integrated cross-disciplinary team of professionals who can support REITs in developing and implementing corporate social responsibility policies or validating those environmental, social and governance procedures currently in place. We work with a broad-spectrum of clients to help them effectively manage their portfolios and real estate assets. Our team’s experience in organizational design, business performance improvement and attestation services make us uniquely qualified to serve in this capacity.
EisnerAmper’s full menu of ESG services tailored specifically for REITs includes:
Environmental, Social and Governance Services
Readiness for reporting of ESG practices Assessment of existing ESG practices under SASB, GRI and other frameworks Attestation report over ESG disclosures and metrics Forensic Analysis of Companies Claiming ESG ESG Investing / Impact Investing Real Estate Investing and Training (LEED and ESG) Corporate Governance
Corporate Social Responsibility Services
CSR and sustainability consulting Design and implementation of corporate social responsibility practices Diversity, equity, and inclusion Employee recruitment, retention, and development Philanthropy and community commitment Board education
Consulting Services
Lease and contract compliance Cost segregation studies Earnings and profits studies Transfer pricing studies Taxable REIT Subsidiary (TRS) structuring
Content Hub
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January 31, 2023
What to Measure for ESG Reporting: 5 Tips
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October 26, 2022
6 Tips to Maximize Your Accounting Firm for ESG Reporting
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April 15, 2022
ESG and Its Impact on the Real Estate Industry
Real estate companies have an increasing responsibility to perform climate-risk due diligence; assess its corporate social responsibility initiatives; and develop, implement and govern its ESG policies. As such, investors and lenders are factor-in a …
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February 23, 2023
REITs and Climate Risks: Financial Impact and Its Mitigants
Climate-related risks pose a significant challenge for REITs, and they are likely to have a greater impact on their business model and financial performance in the future. This article examines the SEC’s rules for climate-related disclosures and the …
Blogs
August 05, 2021
REIT Investing Basics
This blog gives an overview of real estate investment trusts (REITS), a popular way for investors to diversify portfolios.
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October 24, 2022
The Benefits of REITs in the Real Estate Private Equity Fund Structure
The use of real estate investment trusts ("REIT") in real estate private equity fund structures has long been advised as a prudent strategy. Fund sponsors should carefully understand and consider the REIT entity when structuring their funds.
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December 14, 2022
What Hospitality REITs Should Know About Taxable REIT Subsidiaries
Certain REIT’s will be required to use a Taxable REIT Subsidiary (TRS) in conjunction with their operations. The rules around these requirements can vary for hospitality REITs, and special considerations should be given to these entities.
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January 13, 2023
The Importance of REIT Demand Letters
One of the record keeping requirements of being a REIT is to issue an annual shareholder demand letter to its shareholders of record to ascertain actual ownership of its stock. Learn the requirements of a REIT demand letter and understand the penalti…
Blogs
February 02, 2023
Reap the Tax Benefits of a REIT with Careful Planning
This content features a few tax advantages and planning factors to consider when investing in a REIT, based partly on a Financial Advisor article titled “REITs, and Their Tax Benefits, Grow in Popularity” featuring our own Arthur Khaimov.
Articles
February 02, 2023
Domestically Controlled REITs Under Proposed Regulations
The Treasury Department and IRS released guidance on issues related to IRC Sec. 897, which may impact structures that real estate funds and REITs use to shield foreign investors from U.S. tax exposure. This article offers a brief summary of backgroun…
Blogs
February 06, 2023
How Fund Administrators Balance the People-Process-Technology Model to Support Fund Managers
We discuss the role of a fund administrator and how they use a people-process-technology process to support fund managers in an ever-changing landscape of fiscal, technical, and economic forces.