REIT Institutional Ownership Dynamics and the Financial Crisis

Posted: 22 Aug 2013

See all articles by Erik Devos

Erik Devos

University of Texas at El Paso - College of Business Administration - Department of Economics and Finance

Seow Eng Ong

National University of Singapore (NUS) - Department of Real Estate

Andrew C. Spieler

Hofstra University - Department of Finance

Desmond Tsang

McGill University - Desautels Faculty of Management

Date Written: August 21, 2013

Abstract

Collectively, institutional investors hold large ownership stakes in REITs. The traditional view is that institutions are both long-term and passive investors. The financial crisis beginning in 2007 provides an opportunity to analyze the investment choices of institutional investors before, during, and after the crisis. Our results indicate that institutional ownership increased prior to the financial crisis, decline significantly during the period of market stress, but rebounded after. These results hold for four institutional investor subtypes: mutual funds/investment advisors, bank trusts, insurance companies, and other institutions, with mutual funds/investment advisors and bank trusts most clearly exhibiting this pattern. We also find evidence that institutions actively manage their REIT portfolios, displaying a "light to quality" after he market downturn by reducing beta and individual risk exposure, and by increasing ownership in larger REITs.

Keywords: REITs, Institutional ownership, Financial crisis

JEL Classification: G32, G34

Suggested Citation

Devos, Erik and Ong, Seow Eng and Spieler, Andrew and Tsang, Desmond, REIT Institutional Ownership Dynamics and the Financial Crisis (August 21, 2013). Journal of Real Estate Finance and Economics, Vol. 47, No. 2, 2013. Available at SSRN: https://ssrn.com/abstract=2313798

Erik Devos

University of Texas at El Paso - College of Business Administration - Department of Economics and Finance ( email )

500 W. University Ave.
El Paso, TX 79968
United States
915 747 7770 (Phone)

HOME PAGE: http://utminers/utep.edu/hdevos

Seow Eng Ong

National University of Singapore (NUS) - Department of Real Estate ( email )

4 Architecture Drive
Singapore 117566
Singapore
01-65-6516-3552 (Phone)
01-65-6774-8684 (Fax)

Andrew Spieler

Hofstra University - Department of Finance ( email )

Hempstead, NY 11550
United States

Desmond Tsang (Contact Author)

McGill University - Desautels Faculty of Management ( email )

1001 Sherbrooke St. West
Montreal, Quebec H3A1G5 H3A 2M1
Canada

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