With diversification and income as priorities, individual investors, pension funds and institutional investors have been moving massive amounts of capital to the real estate sector. Real estate investment trusts (REITs), with their low stock price volatility and rising dividends, have become one of the most popular forms of real estate capital investment. This in turn has led to increased market capitalizations and broader shareholder constituencies.
This attention also has brought increased shareholder expectations and heightened scrutiny which poses new challenges for REIT directors and officers.
To address the changing REIT climate, The Hartford Financial Services Group, Inc. has a newly updated version of its Directors, Officers and Company Liability Policy for members of the National Association of Real Estate Investment Trusts, Inc. (NAREIT).
“Whether it is Sarbanes-Oxley certification, the implications of a financial restatement, or decisions regarding a proposed transaction, we understand the impact of increased scrutiny on the REIT marketplace and have broadened our policy accordingly,” said Matt Shulman, vice president at The Hartford Financial Products, a division of The Hartford.
He said the policy is specifically tailored to the REIT structure, making it easier for clients to understand and use.
The policy continues to provide customizable protection to meet the specific needs of the individual REIT. Among the enhancements in the latest version are state-of-the-art “non-rescindable Side A” coverage that stays in force even in the face of a material misrepresentation in the application, and broad severability language that preserves coverage for innocent insureds if the other directors or officers are found to have made such misrepresentations.
The Hartford says it has become the nation’s largest writer of directors and officers liability for REITs. It also offers the only NAREIT-sponsored D&O program.
The NAREIT program is available exclusively through Frank Crystal & Co., a privately held insurance brokerage firm. Agents and brokers can visit www.hfpinsurance.com or call Patricia Fitzgerald at 212-277-0457 for more information.
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