Long-term event study of timber real estate investment trust conversions

Piao, Xiaorui; Mei, Bin; Zhang, Weiyi

doi:10.1016/j.forpol.2016.12.009

Cited by 12 publications

(5 citation statements)

References 17 publications

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“…Moreover, Bond and James (2004) and Rehkugler et al (2012) find that European REITs trade at significantly higher NAV premiums than REOCs. Damodaran et al (2005), Brounen et al (2013), and Piao et al (2017), using U.S. data, all find positive cumulative abnormal returns following the announcement of a REOC-to-REIT conversion. Beracha et al (2019) observe increasing efficiency among U.S. REITs in the past ten years and estimate an associated reward through a higher market valuation of 4% annually.…”

Section: Introductionmentioning

confidence: 90%

“…Rehkugler et al (2012) and Bond and James (2004) find that REITs tend to trade at higher priceto-NAV ratios than REOCs. Moreover, Damodaran et al (2005) and Piao et al (2017) document positive cumulative abnormal returns of REOCs following REIT-conversion announcements. Beracha et al (2019) observe efficiency gains among U.S. REITs in the 2010-2017 period and report a reward through market valuation of 4% annually.…”

Section: Market Valuationmentioning

confidence: 95%

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The REIT Conversion Puzzle

Wagner

Woltering

Downs

et al. 2022

Journal of Real Estate Research

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Real Estate Investment Trusts (REITs) are a globally recognized form of real estate ownership that offer tax benefits at a corporate level. Despite their clear advantages, however, a significant share of potentially eligible Real Estate Operating Companies (REOCs) do not opt for conversion to a REIT structure. This paper examines 80 REOC-to-REIT conversions across 13 countries. We find REIT conversions are generally driven by the extent of country-specific tax benefits. They are also more likely following prior conversions by other REOCs, and in countries with a larger share of extant REITs. REIT conversions may be motivated by NAV discounts, especially if management's compensation is highly equity-based. This illustrates the importance of aligning the interests of management and shareholders. On the other hand, relatively restrictive REIT criteria, such as the disclosure and taxation of hidden values during the conversion process, are associated with significantly lower conversion probabilities. Countries that have eased REIT criteria have subsequently seen significantly more conversions.

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Section: Introductionmentioning

confidence: 90%

Section: Market Valuationmentioning

confidence: 95%

The REIT Conversion Puzzle

Wagner

Woltering

Downs

et al. 2022

Journal of Real Estate Research

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“…Adopting the status is regularly rewarded by a positive market valuation. For example, Damodaran et al (2005), Piao et al (2017), andLing et al (2020) find positive announcement effects result from signaling a REIT conversion.…”

Section: Related Literature and Hypothesesmentioning

confidence: 99%

Strategic Transactions around REIT Conversions

Frömel

Wagner

Woltering

et al. 2022

Journal of Real Estate Research

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This paper examines conversion-related M&A activity and the post-conversion performance of 80 Real Estate Operating Companies (REOCs) that chose to adopt Real Estate Invest-ment Trust (REIT) status. We observe distinctly higher M&A activity in the years around conversion dates and relatively higher premiums in conversion-related deals. The REIT for-mat attracts equity from investors more readily than the REOC format, which explains the increase in postconversion M&A activity. Overall, converted REITs realize positive excess re-turns. We find that lower (higher) M&A activity pre-conversion translates into superior absolute (risk-adjusted) post-conversion performance, which illustrates the benefits from such strategic company realignments.

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“…In the analysis of forestry and the forest products industry, the event-study approach has largely been used to analyze the effects of changes in timberland (Sun and Zhang 2011;Sun et al 2013), industrial ownership (Mei and Sun 2008;Piao et al 2017), policy reforms, (Zhang and Binkley 1995;Niquidet 2008;Zhang et al 2020) or trading agreements (Malhotra and Gulati 2010).…”

Section: Event-study Analysismentioning

confidence: 99%

Impacts of Infectious Disease Outbreaks on Firm Performance and Risk: The Forest Industries during the COVID-19 Pandemic

Størdal

Lien

Trømborg

2021

JRFM

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We examine the financial performance of the forest products industry in the initial phase of the COVID-19 pandemic, employing data for publicly trading companies in the industry globally. We first examine the market investor reaction to the declaration of a pandemic by the World Health Organization (WHO) in March 2020 by conducting an event-study analysis. Then, we analyze medium-term changes in stock returns and their systematic risk by an econometric estimation of the capital asset pricing model. Our event-study analysis of the forest products industry shows that the forestry subsector was impacted more than the paper subsector when the WHO declared the pandemic. The effect was most prominent in North America. We find that the systematic risk for the forestry subsector tended to increase during 2020, until October. Again, this effect was most clear in North America. Conversely, the impact on the paper subsector was more stable.

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Long-term event study of timber real estate investment trust conversions

Cited by 12 publications

References 17 publications

The REIT Conversion Puzzle

The REIT Conversion Puzzle

Strategic Transactions around REIT Conversions

Impacts of Infectious Disease Outbreaks on Firm Performance and Risk: The Forest Industries during the COVID-19 Pandemic

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