Why it pays to have women on REIT boards

Real estate investment trusts with more women in leadership outperform their competitors by 2.33 percentage points over five years, finds new research by multinational financial services company Wells Fargo.

Wells Fargo’s analysts Jeffrey Donnelly and Dori Kesten analysed the gender composition of 165 real estate investment trusts (REITs) in the United States. 

Looking at data from 2006 to 2017, the researchers found companies with a greater than average percentage of women on their boards outperformed the competitors in higher average price and total returns. 

The research, Real estate: It’s a man’s world on REIT boards but it pays to include women, found REITs with more than 15.5 per cent women on their boards outperformed by 193-233 basis points on a three to five year forward basis. Total returns were 133-169bps higher, with a greater return per unit of risk. 

Donnelly and Kesten aimed to “shine a spotlight on board diversity in real estate and highlight that the performance benefits of inclusion found in companies globally, applies to real estate companies domestically”.

While the representation of women on the boards of equity REITs has increased over the past decade from 8.5 per cent to 15.5 per cent, it still lags behind the 22 per cent representation on boards in the S&P 0. 

But board composition is changing – slowly. Analysis by executive search company Spencer Stuart has found that 35 per cent of new board members in 2017 were woman – double the amount added in 2008.

Of the equity REITS assessed by Wells Fargo, 34 companies had no women on their boards, and 30 had never had a woman on their board since 2006. On the flip side, women comprised at least one-quarter of boards at 40 companies.

Prison, advertising and energy infrastructure REITs had the greatest percentage of women on their boards, with more than 20 per cent. Industrial, single family and healthcare REITs recorded the smallest percentages of women on boards, with less than 12 per cent.

The Property Council is committed to building a diverse and inclusive industry. In 2015, it established the Property Male Champions of Change, a group of business leaders who are working to increase the number of women in senior leadership positions. 

The Property Council has also formed diversity committees around the country that are investing in mentoring programs, professional development initiatives and research projects.

Find out more about the Property Council’s diversity agenda.