REIT management and boards of directors should review their defensive profile and consider whether to prepare a rights plan.

Key Points:

..Unprecedented market volatility and investor uncertainty due to the coronavirus pandemic provide an opportunity for activist investors and hostile acquirers to seek to exploit recent macroeconomic conditions and gain control without paying stockholders a full control premium.

..REITs experiencing significant declines in stock prices and valuations should review the benefits and limitations of their structural defenses and early warning systems, including any REIT ownership limit.

..Taking into account their specific circumstances, REITs should consider preparing and potentially implementing a stockholder rights plan (a so-called “poison pill”) to protect against unattributed significant stock accumulations, activist approaches, and unsolicited bidder interest.