International Perspectives and REITs

Knut UNGER, 2006

As the German example show, it is possible to stimulate a controversial debate on financial vehicles like REITs and thus overcome the usual extra-democratic decision making on such topics. Precondition to do so is a developed awareness about the consequences of such neo-liberal deregulations within the habitat movements.

Today it still seems that urban social movements and habitat NGOs are far away from being aware on economical frames and macro-political changes which directly influence the composition of the housing markets. Instead of that they react to the crucial consequences of these political changes, mostly after it is too late for simple solutions. Further more they mainly act at local levels while the financial forces already are very well organized globally. The alter-globalisation movements like the WSF always address this problem. However, in many cases their debates continue to be very general, and especially in the habitat sphere there so far hardly is any effective global organizing of counter forces.

The example of ATTAC, the campaigns against the MAI, the GATTs or the European campaign against the Bolkestein directive show that “secret” neo-liberal plans can become cases for international mass movements if a group of well informed, well organized and well based people is willing to focus their activities on the “big global business issues”. A better focused international organisation in the field of housing, land and urban development would be able to raise similar global issues. One of the candidates for such an issue obviously are REITs.

We have to expect, that REITs very soon will be introduced in many more countries with developed or developing real estate markets. After Britain and Germany there will hardly be chance to exclude the other European countries. And, obviously, the introduction in China, India and Arabia finally will lead to global dominance of this vehicle in global real estate investments.

To avoid that development it is very necessary to raise the global awareness and start national campaigns for REITS-alternatives, like: reform, re-strengthening and optimisation of public/social housing and it’s organisms instead of sales and privatisation.

After REITs-Introduction in a country national struggles and campaigns may focus around:

  • Exclusion of housing, social housing or public property from REITs

  • Improvement of tenant and consumer protection

  • Strengthening of town planning instruments

  • Extra taxation on income from REITs

  • Stricter financial regulations on REITs: maximum shares, obligations on reinvestment – less strict obligation on paying dividends

  • Specific legal protection for tenants

  • Possibly, the creation of alternative platforms, which correspond to social criteria. In the USA there are some isolated considerations about “ethical REITs”, which commit themselves to social and ecological standards and goals as well as a regular monitoring. Such requirements should be legally adjusted. Of course the economic net yield would be smaller.

At the same time it is becoming more and more urgent to develop international research and campaigns around REITs and related issues. Targets and operations could include:

Provision and global circulation of information on the consequences of REITs

In Germany it was very helpful that the Ruhr Tenants Forum during the past months was able to collect some international information about housing consequences. Especially the contacts with AIMCO tenants in California allowed to publish some impressing examples. Even contacts to Canada and NAHT helped to build the arguments. They were quoted by the national Tenants Union and noticed by the critical parliamentarians and thus helped to motivate these forces to keep their “no” to residential REITs. This case with high level experts, organizers and politicians in Germany even raised awareness about the need to enlarge activism to international levels, for instance the European Union. And of course even this discourse in Germany is an element to build new alliances against the sell out of public housing.

Permanent information even helped the London Tenants Federation to find and publish a standpoint. It however is not sure that their late interventions will lead to reactions.

Provision and global circulation of information on specific REITS

Because more and more REITs act globally and because REITs often are only temporary structures controlled by huge banks and other financial investors which operate globally, the identification of the responsible global owners can help to stimulate cross-border-interventions. For instance, the Deutsche Bank could be asked for their responsibilities with AIMCO and elsewhere, the same with Morgan Stanley and many other banks and funds across the world.

This idea already appeared in context with the forced evictions by AIMCO in Lincoln Place, California. Activists wrote a letter to the Deutsche Bank and received an answer that the only hold their shares for a client. Further steps to coordinate action between Lincoln Place Tenants, German Tenants, NAHT and HIC were discussed but not implemented in time. Finally it was too late for any help.

Addressing the consequences of REITs at global institutions and events

This was already tried with one of the cases at the rally at WUF in Vancouver. However, the case probably hardly was noticed and understood by many and did not reach the media. In order to achieve real impact the interventions had to be much more elaborated and better addressed.

At some international institutional levels it can be possible and necessary to raise the REITs-question in order to achieve global attention and eventually even institutional reaction.

Raising the issue at institutions like UN Habitat, the Human Rights Council, the ECOSOC etc. at least can raise awareness which is the pre-condition in order to develop an international critical discourse.

As structures like REITs build an incremental element of neo-liberal free capital market orientation of the world powers it may even be helpful to address the case to the leading economical powers in the world like the G8 countries and the World Bank.

Calling for stricter regulations at national levels

International circulation of information and experience can help to lobby for stricter regulations at national levels. After the partial victory in Germany activists around the world can quote from that example and call their governments to exclude housing.

Lobbying for international regulations

Finally it is not unlikely that some transnational regulations could be achieved, at least at the level of the European Union, which in any case will have to deal with the financial lobbyists’ demands for pab-European REITs.

International regulations or agreements could include:

  • Agreements on taxation, avoiding competition with lowest taxation.

  • Agreements on the limitation of shares in an REITs and on transparency about the share holders.

  • Agreements on regulations regarding housing REITs, i.e. specific regulations on social and public housing.

  • Agreements on social standards and housing rights.

REITs, however, are only one of the instruments of global financial capitalism and of course campaigning around this instrument can only be one aspect within the needed global pressure group and networking in defence of social housing.