IDEAS home Printed from https://ideas.repec.org/a/jre/issued/v17n11999p113-126.html
   My bibliography  Save this article

Equity REIT Property Acquisitions: Do Apartment REITs Pay a Premium?

Author

Abstract

Negotiation theory and implied agency costs provide the foundation for the research hypothesis that equity real estate investment trusts (EREITs) may have paid premiums when making real property acquisitions during the 1990s REIT boom. Using a simultaneous equations model and data from the Atlanta, Phoenix and Seattle apartment markets, this research finds that apartment EREITs have paid above market prices for property acquisitions. In Atlanta, a 26.1% premium was evident; in Phoenix, a 27.5% premium was evident; while in Seattle, a premium was not evident. At the property level, the returns to EREITs and private sector or non-securitized investors may differ substantially.

Suggested Citation

  • William G. Hardin, III & Marvin L. Wolverton, 1999. "Equity REIT Property Acquisitions: Do Apartment REITs Pay a Premium?," Journal of Real Estate Research, American Real Estate Society, vol. 17(1), pages 113-126.
  • Handle: RePEc:jre:issued:v:17:n:1:1999:p:113-126
    as

    Download full text from publisher

    File URL: http://pages.jh.edu/jrer/papers/pdf/past/vol17n01/v17p113.pdf
    File Function: Full text
    Download Restriction: no

    References listed on IDEAS

    as
    1. Liu, Crocker H. & Hartzell, David J. & Greig, Wylie & Grissom, Terry V., 1990. "The Integration of the Real Estate Market and the Stock Market: Some Preliminary Evidence," The Journal of Real Estate Finance and Economics, Springer, vol. 3(3), pages 261-282, September.
    2. Daniel C. Quan & John M. Quigley, 1989. "Inferring an Investment Return Series for Real Estate from Observations on Sales," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 17(2), pages 218-230.
    3. Joseph Gyourko & Donald B. Keim, 1992. "What Does the Stock Market Tell Us About Real Estate Returns?," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 20(3), pages 457-485.
    4. Joseph L. Pagliari, Jr. & James R. Webb, 1995. "A Fundamental Examination of Securitized and Unsecuritized Real Estate," Journal of Real Estate Research, American Real Estate Society, vol. 10(4), pages 381-426.
    5. Liu, Crocker H & Mei, Jianping, 1992. "The Predictability of Returns on Equity REITs and Their Co-movement with Other Assets," The Journal of Real Estate Finance and Economics, Springer, vol. 5(4), pages 401-418, December.
    6. James R. Follairi, 1989. "Inferring an Investment Return Series for Real Estate from Observations on Sales," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 17(2), pages 231-234.
    7. Joseph Gyourko & Donald B. Keim, "undated". "What Does the Stock Market Tell Us About Real Estate Returns? (Revision of 18-91) (Reprint 030)," Rodney L. White Center for Financial Research Working Papers 11-92, Wharton School Rodney L. White Center for Financial Research.
    8. William G. Hardin, III & Marvin L. Wolverton, 1996. "The Relationship between Foreclosure Status and Apartment Price," Journal of Real Estate Research, American Real Estate Society, vol. 12(1), pages 101-109.
    9. Jun Han & Youguo Liang, 1995. "The Historical Performance of Real Estate Investment Trusts," Journal of Real Estate Research, American Real Estate Society, vol. 10(3), pages 235-262.
    10. James D. Shilling & John D. Benjamin & C.F. Sirmans, 1990. "Estimating Net Realizable Value for Distressed Real Estate," Journal of Real Estate Research, American Real Estate Society, vol. 5(1), pages 129-140.
    11. Brent W. Ambrose & Esther Ancel & Mark D. Griffiths, 1992. "The Fractal Structure of Real Estate Investment Trust Returns: The Search for Evidence of Market Segmentation and Nonlinear Dependency," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 20(1), pages 25-54.
    12. Halvorsen, Robert & Palmquist, Raymond, 1980. "The Interpretation of Dummy Variables in Semilogarithmic Equations," American Economic Review, American Economic Association, vol. 70(3), pages 474-475, June.
    13. Fred A. Forgey & Ronald C. Rutherford & Michael L. VanBuskirk, 1994. "Effect of Foreclosure Status on Residential Selling Price," Journal of Real Estate Research, American Real Estate Society, vol. 9(3), pages 313-318.
    14. Michael T. Bond & James R. Webb, 1995. "Real Estate versus Financial Asset Returns and Inflation: Can a P* Trading Strategy Improve REIT Investment Performance?," Journal of Real Estate Research, American Real Estate Society, vol. 10(3), pages 327-334.
    15. Thomas M. Carroll & Terrence M. Clauretie & Helen R. Neill, 1997. "Effect of Foreclosure Status on Residential Selling Price: Comment," Journal of Real Estate Research, American Real Estate Society, vol. 13(1), pages 95-102.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. S. Akin & Val Lambson & Grant McQueen & Brennan Platt & Barrett Slade & Justin Wood, 2013. "Rushing to Overpay: Modeling and Measuring the REIT Premium," The Journal of Real Estate Finance and Economics, Springer, vol. 47(3), pages 506-537, October.
    2. Noriko Ashiya, 2015. "Determinants of Potential Seller/Lessee Benefits in Sale¡VLeaseback Transactions," International Real Estate Review, Asian Real Estate Society, vol. 18(1), pages 89-112.
    3. William G. Hardin III & Ken H. Johnson & Zhonghua Wu, 2009. "Brokerage Intermediation in the Commercial Property Market," Journal of Real Estate Research, American Real Estate Society, vol. 31(4), pages 397-420.
    4. James C. Brau & Andrew Holmes, 2001. "Using REITs to Extricate the Effect of Managerial Signalling in Open Market Share Repurchase Announcements," ERES eres2001_123, European Real Estate Society (ERES).
    5. David Ling & Milena Petrova, 2008. "Avoiding Taxes at Any Cost: The Economics of Tax-Deferred Real Estate Exchanges," The Journal of Real Estate Finance and Economics, Springer, vol. 36(4), pages 367-404, May.
    6. John D. Benjamin & Peter Chinloy & William G. Hardin III, 2007. "Institutional-Grade Properties: Performance and Ownership," Journal of Real Estate Research, American Real Estate Society, vol. 29(3), pages 219-240.
    7. Fuerst, Franz & Gabrieli, Tommaso & McAllister, Patrick, 2017. "A green winner's curse? Investor behavior in the market for eco-certified office buildings," Economic Modelling, Elsevier, vol. 61(C), pages 137-146.
    8. Fayez A. Elayan & Thomas O. Meyer & Jingyu Li, 2006. "Evidence from Tax-Exempt Firms on Motives for Participating in Sale-Leaseback Agreements," Journal of Real Estate Research, American Real Estate Society, vol. 28(4), pages 381-410.
    9. William G. Hardin III & Matthew D. Hill & James J. Hopper, 2009. "Ownership Structure, Property Performance, Multifamily Properties and REITs," Journal of Real Estate Research, American Real Estate Society, vol. 31(3), pages 285-306.

    More about this item

    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:jre:issued:v:17:n:1:1999:p:113-126. 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: (JRER Graduate Assistant/Webmaster). General contact details of provider: http://www.aresnet.org/ .

    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 CitEc recognized a reference but did not link an item in RePEc 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.