The Real Property Association of Canada (REALpac) and the Canadian Association of Income Funds (CAIF) today announced the release of an independent governance study on income funds and real estate investment trusts (REITs).

The study, commissioned by CAIF and REALpac and undertaken by SECOR Consulting shows that income funds generally compare favourably with public corporations in complying with the governance guidelines established by the Canadian Securities Administrators in National Policy 58-201: Effective Corporate Governance.

Based on those strict guidelines, some 88% of income funds reporting are explicitly compliant with over 75% of the guidelines, compared with 92% of public companies. Furthermore, 67% are explicitly compliant with over 90% of the guidelines, compared to 71% of publicly traded companies.

“At a time when corporate governance across all sectors is in the spot light, it is not surprising to see income funds draw increased attention,” said Ken Smith, Managing Partner, SECOR Consulting.

“It is not unusual for heightened scrutiny to be placed upon an industry sector that has seen the rapid growth that income funds have,” said Michael Brooks, executive director, REALpac. “The results of this independent study clearly demonstrate that our governance is on par with corporations and we are committed to further dialogue based on the real facts of the issues facing the sector”, he added.

“With the growth of the income fund sector and the inclusion of income funds in the S&P/TSX composite index, the governance of income funds is attracting increased attention,” said Stephen Pincus, chairman, governance committee, CAIF and chairman, income funds group, Goodmans LLP. “This study focuses on the composition, structure and policies of income fund boards, which are key aspects of governance. Establishing this benchmark is just one step in our approach to examining a range of governance issues”, he added.

SECOR reviewed publicly available information for 202 income funds and compared them with a sample of 100 public corporations listed on the Toronto Stock Exchange.