Gender inequality prevails across industries, as many are to this day dominated by men. Females have been struggling to break ceilings and find themselves positions higher up the hierarchy, regardless of their degrees or years of experience in similar fields. Real estate is no different, as investment trusts are largely run by men.
The most recent findings bring such preferences to shame, as they prove that there is indeed a place for women in real estate investment trusts. In fact, they have been found to be the key variable which distinguishes the firms where they work in comparison to an all-male board. The mixed boards where women are given a voice and power to make a decision have been found to be the most rewarding.
Those conclusions were posted on the new report by Wells Fargo & Co, conducted by renown analysts Dori Kesten and Jeffery Donnelly. By working together they analyzed the role assignments to genders, to check whether a board makeup which is inclusive of women would differ from an all men’s.
The analysis included 165 United States’ Real Estate Investment Trusts established and operating from 2006 to 2017. The point of differentiation was a greater than average share makeup of female directors, and such REITs were found to outperform all-male boards. The difference in better performance was 2.33 percent points over a period of five years.
It pays off to have women on your company’s’ board
Among the 165 examined companies, the average percentage of women making up the REIT boards was 15.5 % as per according to the report. The variable under examination and analysis was the share price of REITs, and those with female representation, which was higher than the average, outperformed the ones with no female representation at all by a range of 1.93 to 2.33 percentage point.
When looking at the differences by taking into account both the share price but also the dividends paid, the difference in outperformance was 1.33 to 1.69 percentage points. The latter one is a bit of a smaller difference, but yet significant as according to the report.
The purpose of the study was to bring light to the importance of more inclusive and diversified boards and to help bring awareness that all male boards belong in the past. The report emphasizes the different skills unique to women that can be brought to the company and also mentions the other studies done in the past which prove the same point.
The unique point in this study was made in regards to the performance of real estate investment trusts in particular. While the other studies make comparisons of companies globally, this last one applies the practicality and benefits joined by this industry in particular.
Over the past 10 years, the average representation on REIT boards has increased from 8 percent to 15.5 percent. The greatest average increase, however, has been in the past five years. Unfortunately, the average 22 percent representation is not common on the boards of other companies in the S&P 500, the report by Wells Fargo presented.
While some companies are moving forward, others are taking steps back
The Real Estate Investment Trusts which have an emphasis on energy infrastructure, prisons and advertising have been found to have the highest representation of female board members. On the contrary, those trusts which pertain to the healthcare sectors, single-family housing, and industrial sector have been found to be the least diversified on the basis of gender and the least inclusive, as according to the study.
Even worse so, the timber industry REITs and those centered around data, has a smaller female representation on their boards nowadays than they had previously in 2006. Seems like not only are they lacking progression, but they are working backward.
Thirty-four out of the 165 analyzed companies had no female representation on their boards at all, whereas 40 other REITs under study had a female make up of at least one-fourth of the board. The study’s methodology entailed an analysis of the composition of boards, and a calculation of share price in addition to the total return at the end of the year forms provided from the years 2006 to 2017.