Is another WorldCom or Enron hidden among the ranks of REITs? Corporate accounting scandals have made some investors wary of big public companies, but REITs are taking steps to improve transparency and ease shareholder concerns by imposing stricter corporate governance policies.

Even in the absence of controversy, REITS are complying with the Sarbanes-Oxley Act, which requires publicly-traded companies to establish a system for employees to report suspected accounting or auditing misdeeds to boards of directors.

The most recent example is White Plains, N.Y.-based Acadia Realty Trust, which has restructured its governing process and created the post of lead trustee on June 30. At the same time, Acadia said Chairman Ross Dworman, 43, would step down to “focus more on some other business ventures.” The company wouldn't comment further. Dworman remains a trustee.

The new lead trustee is Lee Wielansky, a trustee since May 2000. He and CEO Kenneth Bernstein will head up the company following Dworman's departure, says Jon Grisham, vice president of investor and media relations.

Most retail REITs have roots as family businesses, and their boards of directors still contain members of the companies' founding families. Analysts consider this practice a no-no, as it lends the appearance that the family's interests are more protected than those of other shareholders.

Other REITS are taking steps to ease shareholder concern, especially under increased scrutiny from large institutional investors. Chicago-based Equity Office Properties Trust, for example, has eliminated staggered boards to remove unneeded impediments to the swift completion of deals, according to Deutsche Bank analyst Louis Taylor.

More are expected to follow suit, says Claus Hirsch, an analyst with Corinthian Partners in New York, even though REITs generally haven't experienced “the egregious outsized salaries you see in some banking companies and some S&Ls” or notorious accounting scandals. (One exception is JDN Realty Corp. in Atlanta, which agreed to a $46 million settlement to a class-action suit by shareholders in 2000 after an accounting scandal. The firm was last sold to Developers Diversified Realty Corp. in Cleveland.) “If one or two more REITs do this,” says Taylor, “then others will be under pressure to be just as transparent.”

Acadia's corporate governance guidelines include creating audit, nominating and corporate governance, and compensation committees comprised of independent trustees; banning repricing of share options; and mandating a majority of independent trustees.

Grisham insists the moves aren't a response to problems within the self-managed REIT. “Part of the impetus has to do with some of the Sarbanes-Oxley legislation, which requires certain committee structure and independence among the committee members.”