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| Title: |
Finance, Investment, and Investment Performance: Evidence from the REIT Sector |
| Author(s): |
Steven H. Ott, Timothy J. Riddiough, and Ha-Chin Yi |
| Journal: |
Real Estate Economics
Volume 33,
Issue 1,
2005 |
We examine financing, investment, and investment performance in the equity REIT sector over the 1981-1999 time period. Analysis reveals significant differences between the old-REIT (1981-1992) and new-REIT (1993-1999) eras. The sector experienced rapid growth in the new-REIT era, primarily from firm-level investment as opposed to new entry. Firm-level investment was largely financed by equity and long-term debt, with little reliance on retained earnings. Investment policy stabilized in the new-REIT era, and capital structures became more complex. We find that REITs provided returns over and above their cost of capital, where most of the value-added investment occurred in the new-REIT era by newer firms. Finally, we present novel evidence on IPO activity and new firm investment-investment performance relations that is consistent with Tobin |
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