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Wealth effects of REIT property-type focus changes: evidence from property transactions and joint ventures

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  • SeungHan Ro
  • Alan J. Ziobrowski

Abstract

Using a sample of 678 property portfolio changes (acquisitions, dispositions and joint ventures) of the US Real Estate Investment Trusts (REITs) during 1990--2009, we investigate how investors react to changes in a REIT’s property-type focus. We find a significant negative market reaction to acquisition and acquisitional Joint Venture events that decrease property-type focus. We also find some statistically insignificant evidence of a wealth benefit from dispositional events that increase property-type focus. Overall, our findings are consistent with explanation for the lack of diversification in REITs; investors prefer to make their own diversification decisions using narrowly focused REITs.

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  • SeungHan Ro & Alan J. Ziobrowski, 2012. "Wealth effects of REIT property-type focus changes: evidence from property transactions and joint ventures," Journal of Property Research, Taylor & Francis Journals, vol. 29(3), pages 177-199, June.
    • Handle: RePEc:taf:jpropr:v:29:y:2012:i:3:p:177-199
    DOI: 10.1080/09599916.2012.703222
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    2. Chen Zheng & Bing Zhu, 2021. "Concentrate or diversify? The relationship between tenant concentration and REIT performance," Review of Quantitative Finance and Accounting, Springer, vol. 57(3), pages 899-927, October.
    3. Mansley, Nick & Wang, Zilong & Weng, Xiaoyu & Zhang, Wenjing, 2023. "Good growth, bad growth: Market reaction to capital raising for REIT expansion," International Review of Financial Analysis, Elsevier, vol. 86(C).
    4. Kreppmeier, Julia & Laschinger, Ralf & Steininger, Bertram I. & Dorfleitner, Gregor, 2023. "Real estate security token offerings and the secondary market: Driven by crypto hype or fundamentals?," Journal of Banking & Finance, Elsevier, vol. 154(C).
    5. Julia Freybote & Frank Gyamfi-Yeboah & Alan J. Ziobrowski, 2014. "Dispositional joint ventures as REIT financing strategy," Journal of Property Research, Taylor & Francis Journals, vol. 31(2), pages 87-107, June.
    6. Kreppmeier, Julia & Laschinger, Ralf & Steininger, Bertram & Dorfleitner, Gregor, 2023. "Real Estate Security Token Offerings and the Secondary Market: Driven by Crypto Hype or Fundamentals?," Working Paper Series 23/6, Royal Institute of Technology, Department of Real Estate and Construction Management & Banking and Finance.

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