The main objective of this study is to investigate the determinants of firm growth in young REITs with the view that REITs with its unique operating conditions may have different implications for new venture growth. This study aims to (a) document growth characteristics of REITs, (b) empirically examine different growth determinants of REITs, (c) explore different growth strategies adopted by REITs, and (d) investigate the dual relationship between growth and profitability in REITs. We use GMM-system estimator to test a dynamic panel data model of firm growth that incorporates different influencers of growth in REITs. Using data on 148 US equity REITs that had its IPO during the period 1993-2005, we find that REIT growth is inversely proportional to REIT size, age and leverage and directly related to cash flow and insider ownership. We also find positive persistency in growth rates in young REITs. But, sustained growth among REITs beyond five years is rare. Also, new REITs that experience high growth in its early years are more likely to survive longer and REITs failure rate declines with size and age. Finally, we find a small positive influence of profit rates on subsequent growth and a positive and significant influence of growth on profits.
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