NEW YORK CITY—One of the best indications of the REIT industry's current stature is the decision by MSCI and S&P Dow Jones Indices to list the trusts as a new, separate sector within the Global Industry Classification Standard, Equity Residential's David Neithercut said at last week's NAREIT REITWeek general session. “This will bring our industry a high level of visibility to investors around the globe, as new products and benchmarks are created based on the sector's constituents,” said the apartment REIT's president and CEO.

The sector that investors will see, he added, will not only be large in terms of market capitalization—nearly $1 trillion today, compared to $58 billion two decades ago. “It will be diverse in the property sectors it encompasses.”

The panel that Neithercut moderated was intended to illustrate that diversity. As leader of a multifamily company, Neithercut was the sole representative of the traditional REIT property sectors in the discussion. His panel of CEOs included W. Benjamin Moreland of Crown Castle International Corp. (wireless infrastructure), David Nunes of Rayonier Inc. (timber), Paul Pittman of Farmland Partners Inc. (farmland), Sean Reilly of Lamar Advertising Co. (outdoor advertising) and A. William Stein of Digital Realty (data centers).

Although timber may not be the first sector that comes to mind when one thinks of REITs, in fact there are five such companies in the space with a combined market cap of $29 billion, Nunes told a REITWeek audience. “It has become an increasingly popular subset within the real estate industry, in terms of institutional investors wanting to add timber as a subset of their real estate portfolio,” he said.

Its comparatively low risk profile is a major draw, he added. Similarly, Pittman said that his business—renting land to family farming operations—was arguably better positioned than many agricultural giants to garner stable cash flow from global demand for food supply.

Crown Castle came to the REIT conversion party in 2014, or about a decade after Rayonier and Digital Realty made the switch. “We realized that this was a cost-of-capital business,” Moreland said. “Since we had always thought of ourselves as a real estate business, we decided it was time to grow up, if you will, and start paying the dividend.” That lower cost of capital will help the company continue growing through acquisitions, explained Moreland. In April, for example, the REIT agreed to acquire Quanta Fiber Networks Inc. for $1 billion.

Lamar also elected REIT status last year, but Reilly pointed out that implementing the decision was a long time coming. Congress enacted language recognizing billboards as real property in the 1980s, he said, and the IRS issued its first private letter ruling that such assets qualified as eligible for REIT treatment about a decade ago.

“That's when we looked at it in earnest,” he said. “But for a variety of reasons, we decided the timing wasn't right for us.” Fast forward to 2012, and Lamar announced plans to become the first publicly traded outdoor advertising REIT. Those plans ran headlong into a barrage of applications by alternative REITs, at which the IRS “sort of hit the pause button.” Lamar finally got its turn in the fourth quarter of last year.

Echoing Moreland's comments, Reilly noted that switching to a REIT has been a boon for Lamar's shareholders as well as his company. “It's a very discipline-imposing structure in terms of capital allocation,” he said.