IR professionals in the REIT sector face a unique set of challenges — mobile apps can help.
While statistics accumulated over the last 20 years fully corroborate the notion that US-listed Real Estate Investment Trusts, or REITs, provide a substantial return benefit (according to Forbes), they also present a tricky situation for the companies that offer them. REIT companies in the US are required to distribute the vast majority of their profits to shareholders in the form of dividends, as Investis explains.
And while these distributed dividends will often return to the business via reinvestments, the industry’s profit-sharing structure has generated a unique problem for investor relations professionals.
Establishing Networks of Communication
Faced with these sector-specific financial requirements, along with the need to generate a revolving investment cycle, IR professionals in the REIT sector are placed in a situation where they must effectively communicate with their shareholders.
A company’s ability to thrive is largely dependent upon 1. how effectively they can explain the variety and depth of their portfolio and 2. their ability to clearly outline an approach to maximizing profit gains on properties. These two factors will also prove crucial when it comes to building and maintaining a strong network of tenants.
While traditional real estate firms generally aren’t required to include much information about these topics on their IR websites, it’s crucial that REIT companies do so in order to generate the necessary enthusiasm to attract new investors and hold onto the ones they already have.
Unfortunately, studies have begun to show that many of these companies have struggled to foster the adequate levels of transparency and consumer engagement they need to succeed. In fact, 55% of US REITs failed to provide any details about occupancy rates or rental income whatsoever, and two-thirds of the industry’s IR departments had no information outlining stakeholder necessities, such as capital structure or basic financial data.
Failure to Connect
The REIT sector has some communication issues that need to be considered — the fact is that while most of these companies have historically traded above their Net Asset Value, many are beginning to slump dramatically. As a result, these once-profitable organizations are getting snapped up by wealthy private equity buyers at a frequent clip.
Blackstone Group recently purchased two formerly profitable US REIT companies, both of which had begun to trade at a significantly reduced value. While these cash-rich buyers are hoping to benefit from the struggles specific to the industry, REIT firms can also rebound on their own.
By adopting a holistic and forward-thinking approach to stakeholder engagement, these companies can reinvigorate their IR programs and build themselves up again. This means not only optimizing existing digital channels for communication, like IR websites and social media outreach strategies, but also seeking out innovative new technologies in order to remain in-step with technological trends and consumer preferences.
The Rewards of Outreach
In the last seven years, the mobile platform has comfortably established itself as the communication tool of choice for business markets worldwide. In fact, it’s estimated that by 2016, 2.16 billion people will own a smartphone, according to eMarketer.
And as the popularity and usage rates of these devices has continued to climb steadily, the mobile app has emerged as the preferred channel for consumer engagement. According to a recently updated report by Yahoo & Flurry, users spend 90% of their time on mobile devices using apps, and the remaining 10% is spent browsing the mobile web.
Luckily for REITs, a recent wave of industry-specific apps are making it easier than ever to integrate the mobile platform into existing IR programs in order to capitalize on this powerful tool’s ability to improve communication, transparency, and ultimately boost levels of both reinvestment and new investments alike.
Designed by a team of investor relations and communications professionals, ShareholderApp enables any company quickly and cost-effectively have its own fully-branded, informative IR app that will seamlessly disseminate necessary financial information to shareholders. With powerful tools like mobile push notifications and one-touch access to vital information, the app establishes a proactive channel for communication and investor engagement.
Considering the importance of ensuring continued investment to meet the industry’s significant dividend distribution requirements, it’s clear that the REIT sector needs to consider a mobile IR strategy — the stakes are simply too high.