Impact of firm-level attributes on listed real estate company performance

IF 1.6 Q3 BUSINESS, FINANCE Journal of Property Investment & Finance Pub Date : 2020-08-25 DOI:10.1108/jpif-03-2020-0030
M. Haran, D. Lo, M. McCord, P. Davis, L. Lim
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Abstract

PurposeThe purpose of this paper is to test the extent to which company-specific attributes including market capitalisation, capital structure and investment focus impact upon the performance of European listed real estate companies. Enhanced understanding of firm-level performance drivers is important for investors in order to diversify their investment portfolios and to mitigate company-specific risks at different points in the real estate cycle.Design/methodology/approachThe study centres on six key listed European real estate markets selected on the basis of market capitalisation, diversity, transparency and maturity. A series of statistical tests are undertaken using EPRA and Bloomberg data for the period of 2007–2017 using 113 listed property companies, all of whom were contemporaneous constituents of EPRA indices in this period. A series of customised performance indices were constructed to evaluate firm-level performance attributes.FindingsFirm-level attributes collectively account for more variation of risk-adjusted return than sector-level attributes over the investigation period. The impact of firm-specific attributes on performance varies significantly from country to country attributable to the contrasting cyclical property market trends in the pre– and post–Global Financial Crisis period. REITs outperformed non-REITs on a risk-adjusted basis attributed to the strong performance of “niche” market entrants allied with stronger regulatory structure. Finally, the findings showcase that sector specialist firms outperform diversified companies inferring that investors should seek to attain diversification through portfolio-based approaches rather than firm-level strategies.Practical implicationsThe results have implications for real estate companies aiming to raise capital internally for growth as higher return on equity in general signals reduced cost of capital. Secondly, the findings should be of practical use to multinationals specialising in international real estate trading in designing their business plans in general and formulating cross-country investment strategies in particular. Last but not least, a more refined conceptualisation of corporate-level performance drivers should complement existing professional practices in relation to business/company appraisal.Originality/valueThe research integrates EPRA and Bloomberg data sets to create a series of bespoke index constructs to measure the impact of firm-specific attributes on European listed real estate companies. Additionally, the authors construct a Herfindahl Index (H.I.) to further the debate on the impacts of diversification within the listed real estate sector. This serves to further heighten investor understanding of investment allocation and portfolio optimisation strategies for the listed real estate sector given the increasingly diverse range of investment opportunities within emerging sub-markets.
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企业层面属性对房地产上市公司业绩的影响
本文的目的是检验包括市值、资本结构和投资重点在内的公司特定属性对欧洲房地产上市公司绩效的影响程度。加强对公司绩效驱动因素的理解对于投资者来说非常重要,这样可以使他们的投资组合多样化,并在房地产周期的不同阶段减轻公司特有的风险。设计/方法/途径本研究以欧洲六个主要上市房地产市场为中心,根据市值、多样性、透明度和成熟度进行选择。本文利用2007-2017年期间的EPRA和彭博数据对113家上市房地产公司进行了一系列统计检验,这些公司都是同一时期EPRA指数的成分股。构建了一系列定制绩效指标来评估企业层面的绩效属性。在调查期间,公司层面的属性比行业层面的属性对风险调整后收益的影响更大。由于全球金融危机前后周期性房地产市场趋势的差异,公司特定属性对业绩的影响因国而异。在风险调整后的基础上,房地产投资信托基金的表现优于非房地产投资信托基金,这归因于“利基”市场进入者的强劲表现,以及更强的监管结构。最后,研究结果表明,行业专业公司的表现优于多元化公司,这表明投资者应该通过基于投资组合的方法而不是公司层面的策略来寻求实现多元化。该研究结果对旨在通过内部融资实现增长的房地产公司具有启示意义,因为较高的股本回报率通常表明资本成本降低。其次,研究结果应该对专门从事国际房地产交易的跨国公司在设计其一般商业计划和制定跨国投资战略方面具有实际用途。最后但并非最不重要的一点是,企业层面绩效驱动因素的更精细概念化应该补充与业务/公司评估相关的现有专业实践。该研究整合了EPRA和彭博社的数据集,创建了一系列定制的指数结构,以衡量公司特定属性对欧洲上市房地产公司的影响。此外,作者构建了赫芬达尔指数(H.I.)来进一步探讨多元化对上市房地产行业的影响。鉴于新兴子市场的投资机会日益多样化,这有助于进一步提高投资者对上市房地产行业的投资配置和投资组合优化策略的理解。
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来源期刊
CiteScore
3.50
自引率
23.10%
发文量
33
期刊介绍: Fully refereed papers on practice and methodology in the UK, continental Western Europe, emerging markets of Eastern Europe, China, Australasia, Africa and the USA, in the following areas: ■Academic papers on the latest research, thinking and developments ■Law reports assessing new legislation ■Market data for a comprehensive review of current research ■Practice papers - a forum for the exchange of ideas and experiences
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