The REIT Vehicle: Its Value Today and in the Future

Posted: 22 Oct 1999

See all articles by Joseph Gyourko

Joseph Gyourko

University of Pennsylvania - Real Estate Department; National Bureau of Economic Research (NBER)

Todd M. Sinai

University of Pennsylvania - The Wharton School; National Bureau of Economic Research (NBER)

Abstract

The real estate investment trust (REIT) structure has come under increasing scrutiny given the problems the structure poses for firms wishing to retain earnings in depressed real estate equity and debt markets. We estimate the net benefits of the structure to be from 2%-5% of industry equity market capitalization, although the benefits are larger for firms with lower payout ratios. In addition, the value of the format doubles as the share of tax exempt/deferred investment in REITs increases to 40%, the fraction obtaining in the broader equity market. Educating this investor clientele on the benefits of the REIT structure is important to REIT management.

JEL Classification: G12, R29, R39

Suggested Citation

Gyourko, Joseph E. and Sinai, Todd M., The REIT Vehicle: Its Value Today and in the Future. Available at SSRN: https://ssrn.com/abstract=186356

Joseph E. Gyourko (Contact Author)

University of Pennsylvania - Real Estate Department ( email )

Philadelphia, PA 19104-6330
United States
215-898-3003 (Phone)
215-573-2220 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Todd M. Sinai

University of Pennsylvania - The Wharton School ( email )

1465 Steinberg Hall-Dietrich Hall
3620 Locust Walk
Philadelphia, PA 19104-6302
United States
215-898-5390 (Phone)
215-573-2220 (Fax)

HOME PAGE: http://real.wharton.upenn.edu/~sinai

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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