Protecting REITs Under Maryland Law

Over the past decade, Maryland-incorporated real estate investment trusts ("REITs")¹ have been under increasing pressure to eliminate or reduce defenses against unsolicited takeovers. Boards have been declassified, directors are now often required to be elected by majority vote, rights plans have expired or been redeemed and stockholders have been provided the concurrent power to amend bylaws, among other examples. As a result, REITs are increasingly vulnerable to unsolicited bids for changes of control that may undervalue the company and its longer-term prospects.

Maryland law provides significant defenses against unsolicited takeovers of public REITs, many of which may be enacted by board action alone without a stockholder vote. Over the past few years, some of these provisions, such as advance notice bylaws (which our firm was the first to develop and use), have evolved to meet changes in law and new economic realities. Even if no governance changes are