An Examination of REIT Dividend Payout Policy

Boudry, Walter I.

doi:10.1111/j.1540-6229.2011.00305.x

Cited by 42 publications

(31 citation statements)

References 24 publications

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“…There is also a rich literature on REIT dividend policy and announcement effects ( e.g ., Wang, Erickson and Gau 1993, Bradley, Capozza and Seguin 1998, Kallberg, Liu and Srinivasan 2003, Ghosh and Sirmans 2006, Hardin and Hill 2008, Boudry 2011). Wang, Erickson and Gau (1993), using data from the premodern REIT era, document positive abnormal event‐day returns for dividend increase announcements and negative returns for dividend decrease announcements.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

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REIT Dividend Policies and Dividend Announcement Effects During the 2008–2009 Liquidity Crisis

Case

Hardin

2012

Real Estate Economics

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Real estate investment trust (REIT) dividend policies and dividend announcement effects during the 2008-2009 liquidity crisis are examined. Multinomial logit results indicate that REITs with higher market leverage or lower marketto-book ratios are more likely to cut dividends, suspend dividends or pay elective stock dividends. These results imply that mitigating going-concern risk is an important motive for REITs adjusting dividend policies during the crisis and support dividend catering theory where investor demand for dividends impacts corporate dividend policies. Moreover, REITs that cut or suspend dividends experience positive cumulative abnormal returns during the post-announcement period after controlling for the potential influence from simultaneous funds from operation announcements. The positive market response over the post-announcement period supports the notion that dividend decisions convey information to investors and is also consistent with the broad catering theory of dividend policy.Research on dividend policy and market reactions to dividend announcements has been conducted in a variety of market environments over the past half century (see, e.g., Lintner 1956, Brav et al. 2005. Little research, however, has focused on these issues in an environment such as the 2008-2009 liquidity crisis. Moreover, although researchers have embraced a wide set of hypotheses and theories including signaling, information asymmetry, agency costs, tax clienteles, firm life cycle and dividend catering to explain dividend behavior, these explanations remain open to debate. 1 During the 2008-2009 crisis, dysfunctional capital markets created an exogenous shock to firms dependent on external capital flows. The broad stock market * National Association of Real Estate Investment Trusts (NAREIT), Washington, DC 20006 or bcase@nareit.com.

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Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

“…Their results are largely consistent with the agency cost hypothesis. Boudry (2011) studies REIT dividend policies using a new methodology for decomposing REIT dividends into discretionary and nondiscretionary components and concludes that dividend smoothing is a primary concern.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

REIT Dividend Policies and Dividend Announcement Effects During the 2008–2009 Liquidity Crisis

Case

Hardin

2012

Real Estate Economics

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“…11 SeeLiu and Mei (1992) andChiang and Lee (2002). 12 SeeBoudry (2011) andHardin and Hill (2008) for a discussion of REIT dividend policy.…”

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confidence: 99%

On the Hybrid Nature of REITs

Boudry

Coulson

Kallberg

et al. 2011

J Real Estate Finan Econ

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The consensus that emerges from the current research on the linkage between securitized and direct investment in real estate is that direct (private) real estate returns play a relatively minor role in the real estate investment trust (REIT) return generating process. However, this result may at least partially be due to the coarseness of the measures of direct real estate returns or the relatively short return horizons used in previous studies. This study takes a different and unique perspective. Unlike earlier studies we do not use aggregated, average appraisal based returns on direct real estate investment. Instead, we use the MIT TBI indexes, which are transaction based price indexes, available both on the aggregate and sub-index levels. We find that the relation between REIT and direct real estate returns appears to be stronger at longer horizons. More specifically, using a cointegration framework, we find robust evidence that REITs and the underlying real estate are related and that they share a long run equilibrium. Interestingly, we find that both REITs and direct real estate returns adjust towards this long run relationship. When we examine property type level data we find similar results.

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“…Only the TRS can shield its income using debt or interest deductions. See Boudry (2009) for a discussion of REIT dividend distribution and taxation.…”

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confidence: 99%

An Analysis of REIT Security Issuance Decisions

Boudry¹,

Kallberg²,

Liu³

2010

Real Estate Economics

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113

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This article tests the ability of traditional capital structure theories to explain the issuance decisions of real estate investment trusts (REITs). For issuances made between 1997 and 2006, we find strong support for the market timing theory of capital structure. Controlling for past returns and growth, a REIT is more likely to issue equity when its price-to-net asset value ratio is high. This suggests that REITs issue equity in public markets when the cost of equity capital is lower in the public market than in the private market. Consistent with traditional market timing, REITs are more likely to issue equity after experiencing large price increases. We also find some support for REITs following the trade-off theory of capital structure. REITs are less likely to issue debt when proxies for expected bankruptcy costs are high. Copyright (c) 2009 American Real Estate and Urban Economics Association.

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An Examination of REIT Dividend Payout Policy

Cited by 42 publications

References 24 publications

REIT Dividend Policies and Dividend Announcement Effects During the 2008–2009 Liquidity Crisis

REIT Dividend Policies and Dividend Announcement Effects During the 2008–2009 Liquidity Crisis

On the Hybrid Nature of REITs

An Analysis of REIT Security Issuance Decisions

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