IDEAS home Printed from https://ideas.repec.org/p/arz/wpaper/eres2016_220.html
   My bibliography  Save this paper

REIT performance and the impact of interest rates and leverage

Author

Listed:
  • Woon Weng Wong
  • Wejendra Reddy

Abstract

This study explores the sensitivity of REIT performance to changes in short and long term interest rates. Utilising data from the Australian market over a 20 year period spanning multiple cycles, highly leveraged funds were found to exhibit a greater sensitivity to adverse movements in long term interest rates compared to those with lower leverage. This suggests that gearing levels and by extension costs of debt, do play a significant role in the returns generating process. Conversely, highly leveraged funds performed better under rising short term interest rates compared to those with lower leverage, which may be a result of improved rental yields associated with periods of economic growth. Lastly fund performance was found to be adversely affected by one period ahead inflation suggesting that capital markets are forward looking in nature and actively incorporate future economic trends into current asset pricing.

Suggested Citation

  • Woon Weng Wong & Wejendra Reddy, 2016. "REIT performance and the impact of interest rates and leverage," ERES eres2016_220, European Real Estate Society (ERES).
    • Handle: RePEc:arz:wpaper:eres2016_220
    as

    Download full text from publisher

    File URL: https://eres.architexturez.net/doc/oai-eres-id-eres2016-220
    Download Restriction: no
    ---><---

    More about this item

    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

    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:arz:wpaper:eres2016_220. See general information about how to correct material in RePEc.

    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.

    We have no bibliographic references for this item. You can help adding them by using 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Architexturez Imprints (email available below). General contact details of provider: https://edirc.repec.org/data/eressea.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.