Over the past few days, we have received inquiries regarding an
article by Green Street Advisors last week (a) questioning the
formation of REITs under Maryland law and (b) announcing that
whether a Maryland REIT retains or renounces its power to opt in to
the classified board provisions of Subtitle 8 of Title 3 of the
Maryland General Corporation Law ("MGCL") will now
represent 25% of the REIT's overall governance score.
For more than 50 years, Maryland has been the jurisdiction of
choice for REIT formation. Today, it is estimated that
approximately 80% of public REITs are formed under Maryland law.
Among the many reasons is the absence of any franchise tax in
Maryland, while in Delaware the franchise tax for a public company
rapidly escalates to $180,000 per year. The MGCL also permits the
charter of a corporation and the declaration of trust of a trust
REIT to authorize the board alone to increase the number of
authorized shares, a power that is critical for REITs,
