Property development activities: value creation or distraction for REITs?

IF 1.6 Q3 BUSINESS, FINANCE Journal of Property Investment & Finance Pub Date : 2022-01-07 DOI:10.1108/jpif-10-2021-0079
W. Wong, J. Ooi
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Abstract

PurposeThis paper examines the evolution and impact of property development activities on REIT performance. The paper provides insights on whether REITs should venture into property development in addition to their core-business of holding income producing properties.Design/methodology/approachThis paper charts and highlights the evolution of development activities of US REITs from 1992 to 2020. The Tobin's Q of property developing REITs and non-property developing REITs are compared using univariate analysis.FindingsDevelopment activities of US REITs grew dramatically during the run up to global financial crisis (GFC) in 2008. The level of development activities has dropped since the GFC and it has not return to its pre-crisis peak. In comparison, development activities of listed property investment companies and homebuilders are less volatile over the same period. The data reveals that property developing REITs enjoy significantly higher Tobin's Q as compared to their non-developing counterparts.Practical implicationsOur graphical evidence from a market without development restriction suggests that development restriction in other REIT regimes has it value in limit REITs' excessive risk-taking tendency during a booming property market. The positive relationship between Tobin's Q and the existence of property development activity support the value creation of this business activity to REITs.Originality/valueThis paper raises overbuilding as a potential cause of the underperformance of the REIT sector during the GFC.
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房地产开发活动:为REITs创造价值还是分散注意力?
目的研究房地产开发活动的演变及其对房地产投资信托基金绩效的影响。本文就房地产投资信托基金除了持有创收物业的核心业务外,是否应涉足房地产开发提供了见解。设计/方法/方法本文描绘并强调了1992年至2020年美国房地产投资信托基金发展活动的演变。利用单变量分析比较了房地产开发REITs和非房地产开发REITs的托宾Q值。研究发现:2008年全球金融危机爆发前,美国房地产投资信托基金的开发活动急剧增长。自全球金融危机以来,发展活动水平有所下降,而且尚未恢复到危机前的峰值水平。相比之下,同期上市房地产投资公司和住宅建筑商的开发活动波动较小。数据显示,与非开发房地产投资信托基金相比,房地产开发REITs的托宾Q值明显更高。实际意义没有开发限制的市场的图形证据表明,其他房地产投资信托基金制度的开发限制在限制房地产投资信托基金在蓬勃发展的房地产市场中的过度冒险倾向方面具有其价值。托宾Q值与房地产开发活动的存在之间存在正相关关系,支持该业务活动对房地产投资信托基金的价值创造。原创性/价值本文提出,过度建设是全球金融危机期间REIT行业表现不佳的一个潜在原因。
本文章由计算机程序翻译,如有差异,请以英文原文为准。
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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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