The Financial Performance Of Real Estate Investment Trusts

Kuhle, James L.; Walther, Carl H.; Wurtzebach, Charles H.

doi:10.1080/10835547.1986.12090517

Cited by 55 publications

(11 citation statements)

References 4 publications

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“…FMPT could provide an excess return of 2.2 percent per month more than expected given the REIT's risk level. All M-REITs exhibited positive JI beyond the KLPI, which is consistent to the finding by Kuhle et al (1986). They found that REITs outperformed the S&P500 Index during 1977 to 1985.…”

Section: Analysis Of Resultssupporting

confidence: 84%

“…They found that equity REITs outperformed the savings account and S&P500 index. The result was consistent with the studies by Burns and Epley (1982), Han and Liang (1995) and Kuhle et al (1986). Similarly, Sagalyn (1990) found that survivor equity REITs outperformed the S&P500 index over the 1973-1987 period.…”

Section: Introductionsupporting

confidence: 89%

“…As for South Korean REITs (K-REITs), Pham (2012) found that K-REITs performed poorly as compared to shares, bonds and property companies from 2002 to 2010, which was inconsistent to the results reported by Wong et al (2012) and Newell et al (2015) in the Singapore market. However, Pham's (2012) finding on a lower correlation between K-REITs and the property companies, suggested some level of diversification potential for investors, concurred to the work of Wong et al (2012) but contradicts to Kuhle et al (1986). Kok and Khoo (1995) were among the first study that examined the performance of M-REITs.…”

Section: Introductionmentioning

confidence: 99%

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Implications of dividend tax reforms on M-REITs performance

Abdullah¹,

Mohd²,

Wong³

2017

JPIF

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Purpose The purpose of this paper is to examine the performance of 19 Malaysian Real Estate Investment Trusts (M-REITs) over the period 1999 to 2014, following the implementation of dividend tax reforms announced in the 2007, 2009 and 2012 budgets. Design/methodology/approach Sharpe index, Treynor index and Jensen α are utilized to compare the performance of M-REITs against a newly developed tax-adjusted value-weighted M-REITs index, equity market, property sector and three month Malaysia Treasury Bills (T-Bills). The calculation of M-REITs returns has been adjusted to take into account the dividend tax reforms which have never been considered in previous studies. Findings Most M-REITs outperform the tax-adjusted value-weighted REITs index, equity market, property sector and three month T-Bills. Property sector performs worst during those periods. Some of the M-REITs have a higher standard deviation than the equity market and the tax-adjusted value-weighted M-REITs index. Most M-REITs have a lower total risk than the property sector. Further analysis shows that before (after) the tax reforms, most M-REITs underperform (outperform) the other sectors. The introduction of the tax reforms benefits both REITs and investors. A significant positive Jensen α for some M-REITs indicates that fund managers are able to time the market or to select undervalued assets. Practical implications Findings of the study would enable investors to evaluate the performance of all REITs in comparison to other financial assets during the period of study for better investment decision making. A more accurate assessment on REITs performance that take into account the tax reforms, is available for investors and fund managers to decide on the investment mix to be included in their portfolio. Moreover, fund managers’ performance can be assessed whether they perform better or worse than the equity market, property sector and three month T-Bills. Originality/value This study contributes to the scant literature on dividend tax reforms and their implication toward REITs performance. It is the first study to thoroughly assess the returns of REITs by taking into account the changes on dividend tax rates announced in the 2007, 2009 and 2012 budgets.

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Section: Analysis Of Resultssupporting

confidence: 84%

Section: Introductionsupporting

confidence: 89%

Section: Introductionmentioning

confidence: 99%

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Implications of dividend tax reforms on M-REITs performance

Abdullah¹,

Mohd²,

Wong³

2017

JPIF

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“…Using historical data of REITs in the USA, numerous studies have focused on the risk-adjusted performance of real state securities as well as tested whether they offer superior returns. These studies include Kuhle et al (1986), Firstenberg et al (1988) Asian real estate companies and Sagalyn (1990), Chan et al (1990), Glascock (1991). Liu et al (1995) suggest in a critical review of the literature on real estate investment performance that any superior real estate performance observed might be an illusion arising from an omission of certain fundamental factors in the estimates of risk.…”

Section: Brief Literaturementioning

confidence: 99%

Do Asian real estate companies add value to investment portfolio?

Liow

Adair

2009

Journal of Property Investment &Amp; Finance

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Purpose -The purpose of this paper is to examine the role of Asian real estate companies with regard to their "value-added" performance and portfolio diversification benefits in Asian mixed-asset portfolios, as well as in international real estate securities portfolios over 1996-2005. Design/methodology/approach -First the risk-return performance for all 13 Asian as well as the US and UK real estate securities markets is compared. For each country, next the correlation profiles between real estate, common stock, bonds and cash are assessed. The value-add benefits of Asian real estate securities in an unconstrained and constrained mixed asset portfolio are then assessed in relation to portfolio return, risk and terminal wealth. Finally, the paper explores whether there are benefits derived from international diversification with a universe of Asian real estate securities from the perspectives of the US and UK investors. Findings -It was found that, whilst there is little evidence of diversification benefits and superior risk-adjusted performance of Asian real estate companies in Asian mixed-asset portfolios, diversification into Asian real estate stocks can provide positive portfolio implications for international investors. Thus investing in Asian real estate securities portfolios rather than investing in Asian mixed-asset portfolios may be seen to be the more effective diversification strategy over this period. Originality/value -The study has provided some interesting and important insights into the dynamics and performance of Asian real estate securities. With an increased emphasis on international property investment and as the regional upturn becomes more evident, Asian real estate companies potentially provide an important real estate investment opportunity for international property fund mangers.

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“…When a single‐factor CAPM‐based model was used to measure the risk‐adjusted performance of REIT stocks, a number of studies found that REITs outperformed common stocks (e.g. Chan et al , 1990; Chen and Peiser, 1999; Kuhle et al , 1986; Peterson and Hsieh, 1997). On the other hand, when a multifactor model was used, a majority of the studies found no evidence that REITs performed better than common stocks (e.g.…”

Section: Literature Reviewmentioning

confidence: 99%

Comparative analyses of hotel REITs: examining risk‐return and performance characteristics

Kim

Jang

2012

International Journal of Contemporary Hospitality Management

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PurposeThis study aims to compare the risk‐return characteristics and performance of real estate investment trust (REIT) hotel companies (hotel REITs hereafter) with those of C‐corporation hotel companies (hotel C‐corps hereafter).Design/methodology/approachThe risk‐return characteristics and performance of hotel REITs and C‐corps were examined by estimating single‐factor and Fama‐French three‐factor asset pricing models for each portfolio. Differences between the hotel REIT and C‐corp estimations were tested using Wald test statistics.FindingsLittle evidence was found that hotel REITs have significantly different risk‐return characteristics and performance than hotel C‐corps, which suggests that hotel REITs and C‐corps are not significantly different in terms of market risk‐return characteristics and performance. The market portfolio had a significantly positive effect on the returns of both hotel REITs and C‐corps. The size and book‐to‐market factors of common stock also had a significant explanatory power for the returns of hotel REITs and C‐corps. Both hotel REITs and C‐corps performed similarly to the market portfolio, on a risk‐adjusted basis, during the 2000s.Research limitations/implicationsDespite the fact that the three‐factor asset pricing model explains a significantly greater proportion of the variation in the hotel firms' returns than the single‐factor asset pricing model, approximately 30 percent of the total variation still remains unexplained.Practical implicationsThe risk‐return characteristics and performance of hotel REITs and C‐corps revealed by this study will render hotel investors' decisions between the two organizational structures less complicated. In addition, the findings can be used by portfolio managers to construct a well‐diversified portfolio.Originality/valueA multifactor asset pricing model was used for the first time in this article to examine the risk‐return characteristics and performance of hotel companies. In addition, the importance of understanding differences between REIT and C‐corp structures in the lodging industry is emphasized.

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The Financial Performance Of Real Estate Investment Trusts

Cited by 55 publications

References 4 publications

Implications of dividend tax reforms on M-REITs performance

Implications of dividend tax reforms on M-REITs performance

Do Asian real estate companies add value to investment portfolio?

Comparative analyses of hotel REITs: examining risk‐return and performance characteristics

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