The Long-Run Performance of REIT Ipos

36 Pages Posted: 12 Nov 2001

See all articles by Richard J. Buttimer

Richard J. Buttimer

University of North Carolina (UNC) at Charlotte - Department of Finance & Business Law

David C. Hyland

Xavier University

Anthony B. Sanders

George Mason University - School of Business

Date Written: October 2001

Abstract

Real estate and real estate investment trust performance has been examined in a number of papers. In general, there has been little evidence that real estate investment trusts (REITs) have earned significant positive abnormal returns based on REIT indices such as NAREIT and Wilshire. There is, however, empirical evidence that REITs exhibit positive abnormal returns in the case of initial public offerings (IPOs). While short-run REIT IPO behavior has been examined, the long-run behavior of REIT IPOs has not been examined within the context of a factor-based asset pricing model. We find that REIT IPOs generate long-run positive abnormal returns based on a sample of REIT IPOs. This sample period coincides with a period of two initial public offering waves for the REIT industry. We find that (using a Fama and French (1993) type four factor model for long-run IPO behavior) REIT IPOs generated significant and positive abnormal returns in the 1990s but not the 1980s. In comparison, the NAREIT and Wilshire Indices did not generate positive and significant abnormal returns over the same period.

Keywords: REIT, IPO, Long-Run Performance

JEL Classification: G10, G12

Suggested Citation

Buttimer, Richard J. and Hyland, David C. and Sanders, Anthony Bown, The Long-Run Performance of REIT Ipos (October 2001). Available at SSRN: https://ssrn.com/abstract=290332 or http://dx.doi.org/10.2139/ssrn.290332

Richard J. Buttimer

University of North Carolina (UNC) at Charlotte - Department of Finance & Business Law ( email )

9201 University City Blvd.
Charlotte, NC 28223
United States
704 687-6219 (Phone)

David C. Hyland (Contact Author)

Xavier University ( email )

Cincinnati, OH 45207

Anthony Bown Sanders

George Mason University - School of Business ( email )

Fairfax, VA 22030
United States

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