The Factors Affecting the Market Value/Book Value and Profitability of REITs in Turkey

Abstract

Increasing income level and the desire to live a more comfortable life in countries with an increasing population are constantly driving the demand for real estate. Real estate investment trusts (REITs) are capital market institutions that can invest in real estate, real estate-based capital market instruments, real estate projects, real estate-based rights and capital market instruments. In addition, they establish partnerships to realize specific projects, engage in other permitted activities, and are organized by the Capital Market Law in Turkey. In this study, the fixed effects panel data regression model is used to determine the financial indicators that affect the market value and profitability of the Turkey REITs that are traded in the Borsa İstanbul REITs Index. The study covers 21 REIT companies. The data set is in the period between 2010:Q1 to 2019:Q4 in the analyses. The results show that return on assets (ROA), return on equity (ROE), asset turnover, leverage, equity multiplier and current asset turnover are effective on the market to book ratio (MBR). The ratios that affect the ROA are MBR, ROE, acid-test, leverage, equity multiplier, EBITDA/sales and current asset turnover. Moreover, the ratios that affect the ROE are the ROA, MBR, acid-test, asset turnover, leverage, and equity multiplier.

Performance evaluation and volatility of Turkey REITs during COVID-19 pandemic

“…High dividend payout, as well as tax exception, is the main driving factor for the success of REITs in the US and Australia as REITs tend s to increase liquidity as well as efficiency of the real estate markets (Quek and Ong, 2008). REITs are capital market institutions that allow investment in several real estates, real estate projects, real estate-based rights, real estate-based capital market instruments, and capital market instruments (Tekin, 2021). Public REITs are the listed REITs in the property securities with the evidence of their gaining increasing significance among European countries in recent years (Newell and Marzuki, 2018) while private REITs have small numbers of investors that are avoiding volatility in the public REITs (Corgel and Gibon, 2008).…”

“…Furthermore, equity REITs and mortgage REITs are the main types of REITs. Equity REITs are income-generating real estate through rent while mortgage REITs may either lead to direct ownership in the case of owning real estate and becoming operators or indirect owners through purchasing of mortgage-backed securities (see for examples; Li and Orzano, 2020; Tekin, 2021). This was conducted before COVID-19 which brought about new normal to all aspects of life.…”

“…In addition, recent conflicting findings make the finding inconclusive. Tekin (2021) revealed the Turkish REITs' significant contribution to Turkish real estate markets. However, Sumer and Ozorhon (2020a, b) and Coşkun et al.…”

“…(2020) and a policy of flexibility regarding 90% taxable earnings distribution which make Turkish REITs unique globally. Similarly, Turkish REITs have significantly contributed to the physical real estate market in Turkey (Tekin, 2021). Although REITs are globally recognized investments, country-special differences do exist in the type of businesses they could invest in (Lorenz, 2020).…”

Chief Executive Officers and the Value of US Airlines: The Moderating Effect of Carrier Type

“…In another study in the banking sector, Simoens and Vander Vennet [32] chose market-to-book value as the dependent variable. Tekin [34] examined the determinants of market-to-book value in the real estate investment trust business. The extant literature has also used market-to-book value as the explained attribute in the context of airline business [23,29].…”