The Real Property Association of Canada (REALpac) and the Canadian Association of Income Funds (CAIF) announced the release of an independent governance study on income funds and real estate investment trusts (REITs) to say that "income funds generally compare favourably with public corporations in complying with the governance guidelines established by the Canadian Securities Administrators."

The study was commissioned by CAIF and REALpac and undertaken by SECOR Consulting, an independent strategic consulting firm, to assess trust performance relative to the National Policy 58-201 on Effective Corporate Governance.

They said that, based on the strict guidelines of that policy:

1) 88% of income funds reported being explicitly compliant with 3/4 of the guidelines;
This differed little from 92% of public companies in general;

2) 2/3 of trusts are explicitly compliant with over 90% of the guidelines;
This compared to 71% compliance at that level by publicly traded companies.

Michael Brooks, Executive Director, REALpac commented that, “It is not unusual for heightened scrutiny to be placed upon an industry sector that has seen the rapid growth that income funds have. 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.”

Stephen Pincus, Chair, Governance Committee, CAIF and Chair, Income Funds Group, Goodmans LLP added that, “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.”

He added that, “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.”

The SECOR study involved review of publicly available information for 202 income funds to compare them with a representative sample of 100 public corporations listed on the Toronto Stock Exchange. While not entirely comprehensive, the study reached many of the 225 trusts on the Toronto Stock Exchange.

One assumes that the sample of 100 corporate filings selected by SECOR would be fairly representative of the many hundreds of companies listed on the exchange. And one also hopes that the sample can be compared in a meaningful way to the size and recency of issue seen among income trusts.