Shareholder Activism in the REIT Sector: An Evolving Landscape

Shareholder activism in the public REIT sector has evolved from a marginal tactic employed by a small number of high-profile hedge funds into a persistent, structural feature of corporate life. The public REIT model, long characterized by relative stability and predictable cash flows, now finds itself operating in an increasingly adversarial environment. Activist campaigns are no longer episodic; they are omnipresent, sophisticated, and often multidimensional.

This new era of shareholder engagement is marked by a dramatic expansion in the types of actors involved, the sophistication of their tactics, and the strategic issues they target. Where activism once focused on unlocking value through M&A or balance sheet restructuring, today’s campaigns address governance, transparency, executive compensation, and even environmental, social, and governance performance. As REIT boards and management teams balance long-term strategic plans against increasingly vocal and multifaceted activist campaigns, understanding the new landscape is essential.

Market Trends: Activism Accelerates and Diversifies

The seeds of today’s activist landscape in the public REIT sector were sown more than a decade ago. In 2015, Goodwin’s “Barbarians at the (REIT) Gates” argued that the REIT model was primed for disruption. REITs’ frequent disclosure of net asset values (NAVs), combined with often static governance practices and a traditionally long-term investor base, made them ripe targets. Activists could easily highlight discrepancies between market value and NAV to allege underperformance, strategic stagnation, or governance failure. We cautioned that no public REIT, however large or small, should assume that it was immune from the forces at work in the marketplace.

Shareholder activism has only grown in the years since, exploding in both scale and scope across market sectors. According to Barclays Investment Banking’s Global Shareholder Advisory Group, activists launched 243 campaigns across global markets in 2024 — more than any year since 2018.^[1] In the public REIT sector alone, 2024 saw the launch of 38 campaigns against public REITs, with approximately 20 new campaigns launched in 2025 year to date. The universe of potential activists in the REIT sector also expanded to include a wider array of players, ranging from strategic competitors, institutional investors, and family offices to an ever-growing number of dedicated activist funds. Barclays reported that fewer than 20% of global 2024 campaigns were led by large, well-known activist investors. Nearly 20% came from first-time entrants, a reflection of falling entry barriers and the expanding appeal of activism as a mainstream strategy.

The nature of campaigns has also changed. Large-cap companies across the wider market (over $25 billion in market capitalization) represented a record 30% of activist targets in 2024, signaling that size alone no longer deters activist interest. At the same time, economic and geopolitical uncertainty reshaped activist agendas. Where activists once focused heavily on M&A and return of cash to shareholders, they now increasingly demand operational improvements, governance changes, and more optimal allocation of capital. CEO turnover within the S&P 500 linked to activism has tripled since 2020, underscoring the indirect power of campaigns to drive leadership change and strategic pivot.

Finally, the universe of hostile actors in the public REIT sector has greatly expanded. In some cases, traditional activism still plays out in its usual form: an investor takes a small equity stake, issues a public letter to the board, and seeks changes through private dialogue, proxy contests, or both. But in other scenarios, activism takes a more adversarial or unconventional path:

• Hostile bids. Hostile offers can serve not only as genuine acquisition attempts but also as mechanisms to force a company into play, pressure management to explore alternatives, or push for operational transparency. This is largely true whether the offer comes from a credible source, such as a strategic competitor, or a less credible source of questionable intent or creditworthiness.
• Campaigns with an inside ally. In another variation, a former executive, board member, or insider may join forces with external investors to engineer a leadership change or propose a strategic overhaul. These campaigns often combine insider knowledge with outside capital and marketing sophistication.
• Short-based activism. Here, an investor takes a short position in the stock, then publishes a research report (often critical and sometimes anonymous) alleging fraud, overvaluation, or governance failures. These reports can then gain traction on social media and financial news outlets, accelerating stock declines and sometimes even prompting regulatory scrutiny.

New Tactics and Escalation Paths

Two defining features of modern activist campaigns are their escalation strategies and savvy media use. Activists often start with private outreach or public letters. If met with resistance, they escalate — announcing a public stake, filing proxy materials, launching dedicated campaign websites, or leaking materials to the press. This process is designed to exert maximum pressure on boards while minimizing initial confrontation. Once the company is drawn into the spotlight, its options narrow and its negotiating leverage erodes.

Moreover, activists no longer rely solely on investor letters and proxy contests. They increasingly wage campaigns in the digital arena — on LinkedIn, X (formerly Twitter), Reddit, and other platforms that can amplify pressure exponentially. Campaigns may now start with tactics such as pairing a report challenging financial integrity with a coordinated social media push aimed at retail investors.

The media component introduces a further layer of asymmetry. Public companies are bound by strict disclosure rules under the federal securities laws, including Regulation FD, which prohibits selective disclosures of material information. Activists, by contrast, can publish, post, and tweet all manners of claims and theories with far less regulatory exposure. This asymmetry often allows them to control the narrative with relative freedom and little downside. The proliferation of free encrypted email and other messaging platforms further adds to the asymmetry because activists and other hostile actors can send inflammatory anonymous letters and messages to board members, independent auditors, whistleblower hotlines, journalists, and regulators, seemingly without accountability or repercussion. Similarly, posts, tweets, and other public messaging, particularly in unregulated social media forums favored by retail investors, are other ways that activists can stir the pot without real risk of accountability.

The SEC’s adoption of the universal proxy rule in 2022 introduced another element that activists can use in their favor. This rule requires both companies and activists to use a single proxy card that includes all nominees, regardless of who nominated them. For partial-slate proxy contests, it significantly reduces the costs and procedural hurdles historically associated with running a dissident campaign. This has made it easier for activists to challenge incumbents without launching a full control contest.

Vulnerability Areas for REITs

As noted above, activism in all its forms is now a permanent feature of the public REIT sector, alongside the rest of the broader market. Moreover, there are dynamics unique to the REIT sector that some activists might see as structural soft spots:

• Financial transparency — particularly the regular circulation of NAV estimates — provides an easy benchmark for assessing (and criticizing) performance. A persistent discount to NAV becomes a narrative anchor for claims of alleged management failure, strategic drift, or misaligned incentives.
• Development pipelines, asset repositioning, and deleveraging plans typically employed by REITs can span multiple years. Activists exploit the market’s preference for near-term results by offering seemingly simple alternatives: spin-offs, asset sales, special dividends, or recapitalizations that promise quick value.
• The shareholder base in many REITs has shifted. Once dominated by long-only institutional investors, it is now increasingly populated by event-driven and activist-friendly funds, particularly after a campaign begins. When an activist stake is announced and the stock price rises, traditional holders often exit, replaced by new investors aligned with the activist’s agenda. This transition increases pressure on boards and narrows their room to maneuver.

While the ownership limitation provision that is built into every public REIT’s charter was once thought to provide a form of structural protection to activist attacks, the nature of today’s activist playbook belies that notion. Most charter ownership limitation provisions are set at 9.8% (and the vast majority above 5.0%), but activists can, and routinely do, launch public campaigns against REITs based on an initial stake amounting to no more than 1 or 2 percent, sometimes even less. Today, it is the size of the microphone that matters, not the size of the actual investment.

The True Costs of Activism

Activist campaigns are not only disruptive for public REITs but also expensive. A full-scale proxy contest, for example, can cost millions of dollars in direct costs, including legal fees, proxy solicitors, PR consultants, and contested board elections. This does not include the extensive time commitment from senior leadership, which may consume hundreds of hours of board and executive bandwidth at a critical moment for strategic execution.

The indirect costs of activism are harder to quantify but often more severe. Strategic transactions may be delayed or derailed entirely. Partnerships may be put on hold. Talent recruitment and retention can suffer amid uncertainty and negative headlines. For companies already navigating sector headwinds — such as interest rate pressure, inflationary construction costs, or pandemic-driven behavioral shifts — the distraction of a prolonged activist engagement can further compromise resilience and execution.

Leadership turnover is another not uncommon consequence. The “2023 U.S. Spencer Stuart Board Index” noted that companies targeted by activists are 30% more likely to replace their CEOs within a year. Changes to board composition are even more likely in the wake of activist campaigns. While board and management refreshment can be beneficial for shareholders in the long run, sudden leadership transitions can interrupt momentum, erode institutional knowledge, and trigger further scrutiny from investors, analysts, and ratings agencies.

Moreover, reputational damage can persist long after the proxy cards are counted. Companies that lose activist contests — or appear to resist reasonable demands — may suffer declines in investor trust, increased cost of capital, or chronic undervaluation. Even companies that prevail in the short term often emerge with wounded reputations and a changed investor base.

As a result, traditional governance defenses — like classified boards, restrictive bylaws, and poison pills — are under more intense scrutiny. These mechanisms are now less effective as deterrents and more likely to be perceived as evidence of managerial entrenchment.

What Should REITs Be Doing Now: A Strategic Playbook

In this increasingly adversarial environment, REIT boards cannot afford to be passive. The most effective defense is a proactive strategy that addresses potential activist concerns before they materialize. Boards that regularly evaluate their vulnerabilities, assess the alignment of their governance structures with market expectations, and clearly articulate their strategic rationale are far less likely to be caught off guard.

• Proactive shareholder engagement: Ongoing dialogue with institutional investors, proxy advisory firms, and retail shareholder groups — not limited to proxy season — builds trust and allows management to surface and address concerns early. In this context, the investor relations function takes on strategic importance. Companies must go beyond earnings calls and quarterly updates to communicate their value proposition, governance philosophy, and forward-looking vision.
• Capital allocation strategy: Boards and management teams must be prepared to explain how capital allocation decisions support shareholder value, both in the short and long term. Transparency of trade-offs — such as leveraging near-term NOI to fund long-term asset repositioning — can preempt activist critiques.
• Governance: Shareholders favor board refreshment practices that ensure a balance of continuity and innovation, independent leadership structures, and thoughtful approaches to compensation. Executive pay remains a lightning rod for activism, particularly when incentive plans are opaque, overly generous, or misaligned with performance. A well-structured and clearly disclosed compensation framework signals discipline and accountability.
  To be sure, corporate governance for REITs is not a “one-size-fits-all” proposition. We do not recommend any particular set or subset of governance positions as a blunt instrument approach for all public REITs. Rather, the board of each public REIT must regularly evaluate the company’s corporate governance profile in light of all relevant facts and circumstances to determine whether the profile is one that provides the board, in its business judgment, with the tools and flexibility to fulfill its overarching duty to maximize stockholder value over the long term.
• Preparedness: Boards should also be prepared to respond quickly and credibly if a campaign emerges. This requires scenario planning, engagement protocols, and alignment with legal and communications advisers. A fractured or defensive response can embolden activists and erode the board’s legitimacy. Conversely, a calm, fact-driven, and respectful response can buy time, preserve credibility, and allow the company to maintain control of the narrative.

Conclusion: A New Normal in Governance

Shareholder activism is no longer a sporadic or peripheral phenomenon in the REIT sector — it is a defining feature of the landscape. The transparency, valuation sensitivity, and structural idiosyncrasies that make REITs attractive to investors also make them vulnerable to activist pressure. The combination of universal proxy rules, a diversified activist base, and elevated market scrutiny ensures that no REIT — regardless of size, strategy, or history — is immune.

By anticipating activist concerns, communicating transparently, and aligning governance practices with shareholder expectations, boards can reduce the likelihood of confrontation and emerge stronger if challenged.

^[1] “Global Shareholder Advisory Group Annual Report,” Barclays Investment Banking (2024). See, www.ib.barclays/our-insights/shareholder-activism-surged-2024.html.

This informational piece, which may be considered advertising under the ethical rules of certain jurisdictions, is provided on the understanding that it does not constitute the rendering of legal advice or other professional advice by Goodwin or its lawyers. Prior results do not guarantee similar outcomes.