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The wealth effects of real estate transactions: The case of REITs

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Abstract

Recent literature analyzing corporate acquisitions and sales of real estate has shown that statistically significant gains accrue to both buyers and sellers when the transaction is announced. In this paper, we focus solely on the real property transactions of tax-qualified Real Estate Investment Trusts (REITs) to determine if REIT shareholders experience a similar pattern of positive wealth effects. We find that REITs do not experience any significant wealth effects from transaction announcements. However, we provide evidence that a significant positive wealth effect does occur upon the announcement of a sale transaction when the sale is associated with an increase in REIT dividends.

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Authors and Affiliations

  1. MIG Realty Advisors, Inc., 33401, West Palm Beach, Florida

    Willard Mcintosh

  2. Department of Finance, College of Business and Economics, University of Kentucky, 40506, Lexington, Kentucky

    Steven H. Ott

  3. Department of Finance, James J. Nance College of Business Administration, Cleveland State University, 44115, Cleveland, Ohio

    Youguo Liang

Authors
  1. Willard Mcintosh
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  2. Steven H. Ott
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  3. Youguo Liang
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Mcintosh, W., Ott, S.H. & Liang, Y. The wealth effects of real estate transactions: The case of REITs. J Real Estate Finan Econ 10, 299–307 (1995). https://doi.org/10.1007/BF01096944

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  • DOI: https://doi.org/10.1007/BF01096944

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