Advanced Search
MyIDEAS: Login to save this paper or follow this series

Rushing to Overpay: The REIT Premium Revisited


Author Info

  • S. Nuray Akin

    (Department of Economics, University of Miami)

  • Val E. Lambson

    (Department of Economics, Brigham Young University)

  • Grant R. McQueen

    (Marriott School, Brigham Young University)

  • Brennan Platt

    (Department of Economics, Brigham Young University)

  • Barrett A. Slade

    (Marriott School, Brigham Young University)

  • Justin Wood

    (Marriott School, Brigham Young University)


We explore the questions of whether and why Real Estate Investment Trusts (REITs) pay more for real estate than non-REIT buyers, consequently breaking the law of one price. We develop a model where REITs optimally pay more for property because (1) they are able, due to capital access advantages and, (2) are occasionally compelled, due to regulatory time constraints on the deployment of capital. We show that the typically large (20 to 60 percent) and statistically significant (p-values less than 0.01) REIT-buyer premiums found in standard empirical hedonic pricing models are biased due to unobserved explanatory variables. Using a repeat-transaction methodology that controls for unobserved independent variables, we find the REIT-buyer premium to be about 5 percent. Furthermore, we show that REITs¿ ability (as measured by access to capital markets) and regulator compulsion (as measured by capital deployment deadlines) are related to the price premium.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL:
File Function: First version, 2011
Download Restriction: no

Bibliographic Info

Paper provided by University of Miami, Department of Economics in its series Working Papers with number 2011-1.

as in new window
Length: 48 pages
Date of creation: 2011
Date of revision:
Publication status: Forthcoming: working
Handle: RePEc:mia:wpaper:2011-1

Contact details of provider:
Postal: P.O. Box 248126, Coral Gables, FL 33124-6550
Phone: (305) 284-5540
Fax: (305) 284-2985
Web page:
More information through EDIRC

Related research

Keywords: Real Estate Investment Trusts (REITs); commercial properties; hedonic price analysis; repeat transactions; market efficiency; law of one price; price premium;

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:


No references listed on IDEAS
You can help add them by filling out this form.



This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.


Access and download statistics


When requesting a correction, please mention this item's handle: RePEc:mia:wpaper:2011-1. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christopher Parmeter).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.