No Vacancy: Activism Invades the REIT Space

Shareholder activism, once a rare occurrence for Public Real Estate Investment Trusts (REITs), has become a normal part of life. These companies that own, operate, or finance income-producing real estate were previously seen as stable investments with predictable income. However, they're now facing increasing challenges from activist investors. As we've reported before - in many other industries - the current brand of activist investors aren't just looking for quick financial wins; they're also pushing for changes in how companies are managed, how transparent they are, how executives are paid, and even how they address environmental and social issues.

The rise in activism began over a decade ago. Activists realized that REITs were particularly vulnerable because they often share their Net Asset Value (NAV)—the estimated value of their properties. If a REIT's stock price was lower than its NAV, activists could argue the company was underperforming.

Since 2015, activism has exploded, with 2024 seeing the highest number of campaigns globally since 2018. In the REIT sector alone, there were 38 campaigns in 2024 and around 20 new ones in 2025 so far.

What's more, it's not just big, well-known activist investors anymore; a wider range of players, including smaller funds and even strategic competitors, are getting involved.

Modern activist campaigns use a variety of sophisticated tactics. They might start with private conversations, but if they face resistance, they'll escalate by going public, using social media (like LinkedIn and X) to spread their message, and even leaking information to the press. Unlike public companies, which have strict rules about what they can disclose, activists have more freedom to share their claims, even anonymously. A new rule called the universal proxy rule, introduced in 2022, also makes it easier and cheaper for activists to challenge current management by allowing all nominated candidates on a single ballot.

REITs have some unique vulnerabilities that activists often target. Their transparent NAV disclosures can be used to highlight perceived underperformance. Also, many of their long-term development plans don't show immediate results, which activists exploit by suggesting quick fixes like selling assets or issuing special dividends. The investor base for many REITs has also changed, with more "activist-friendly" funds joining once a campaign starts, increasing pressure on boards.

Even though REITs have ownership limits in their charters (typically around 9.8%), activists can launch significant campaigns with much smaller stakes because it's about getting their message out, not just how much they own.

Dealing with activist campaigns is not only disruptive but also very expensive for REITs, costing millions in legal and consulting fees, not to mention the significant time commitment from leadership. The indirect costs can be even worse, potentially delaying important deals, hurting talent recruitment, and damaging the company's reputation. To avoid these issues, REIT boards need to be proactive. This means regularly talking with their investors, being clear about their financial strategies, having strong governance practices, and being prepared to respond quickly and effectively if an activist campaign does emerge.

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