Women comprise more than a quarter of all US REIT boards

The number of women appointed to publicly traded U.S. real estate investment trust boards has more than doubled in the last eight years, according to a recent analysis by S&P Global Market Intelligence.

Women accounted for 27.7% of total REIT board members in May, up from 10.7% at the end of 2014, according to the data. Members who sit on multiple boards were counted multiple times for each board on which they serve.

CareTrust REIT Inc. had the highest percentage of female board members at 60%, followed by Wheeler Real Estate Investment Trust Inc. at 57.1%.

In March 2017, asset manager State Street Global Advisors Inc. issued new guidelines to drive greater board diversity. In a press release, the firm said that if a company failed to take action to increase the number of women on its board, State Street would use proxy voting power to influence change.

Other major proxy advisory firms such as Institutional Shareholder Services Inc. and Glass Lewis & Co. LLC soon adopted a similar stance, along with several large institutional firms such as BlackRock Inc. and Vanguard Group Inc.

Female representation on REIT boards saw a significant jump the following year, rising from 14.7% in 2017 to 18.3% in 2018. That percentage has continued to steadily rise each year, Market Intelligence data showed.

When State Street introduced their guidelines in 2017, 1,548 companies were identified as lacking a woman on their board. As of February, 948 of those companies had added at least one female director, according to State Street's website.

Last year was the fourth straight year that at least 50% of all new REIT directors were women, according to a report from executive recruitment firm Ferguson Partners.

"We saw a big uptick that first year. Since then, it's been relatively steady, where literally it's almost always come out to just about half of all new directors are women versus men," Ferguson Partners Vice Chairman Jeremy Banoff said in an interview.

The firm also found that between 2018 and 2021 there was a 135% increase in the number of REIT boards that have three or more female directors. As of 2021, there were 58 boards with three female directors, up from 28 in 2018; 13 boards with four female directors, up from three; and two boards with five female directors, up from zero.

Industry trade organization National Association of Real Estate Investment Trusts Inc. also tracks board diversity among its own members. Female representation on REIT boards reached 26% in 2021, up 9% from 2018, according to Nareit Senior Vice President of Industry Affairs Nathaalie Carey.

"As publicly listed companies, we are very responsive to our stakeholders, to our investors, to our employees. And nine times out of 10, we have to lead the way in these social issues, right — the [environmental, social and governance] area, because it is not only an expectation, it's a part of the demand," Carey said.

The number of U.S. REITs without any women on their boards decreased from 48 in 2017 to 29 in 2018, according to Market Intelligence data. That figure fell to just five REITs at the end of 2021 and remained at that level in May 2022.

Similarly, Ferguson Partners said that only 2.8% of publicly traded REITs lack female representation on their boards.

As the number of women on REIT boards continues to increase, Banoff said the next step is looking at how to get women into board leadership roles.

In 2020-2021, women on REIT boards who held the title chairperson of the board or lead independent director reached 24.3%, up from 21.2% in 2019-2020, Ferguson Partners found. Women who held the title chairperson of committee reached 13.7% in 2020-2021, up from 9.1% in 2019-2020.

The challenge is that many women being elected to boards tend to be younger than existing male board members and lack the experience or tenure required.

Carey said that in order to address that issue, the main focus has to remain on simply getting more women onto boards to start with.

"I believe that once the women are at that table, they can figure out and they will understand how to navigate in order to move into positions of leadership," Carey said.