The Role of Debt in REIT Equity Issuance at a Discount to Net Asset Values

Soyeh, Kenneth W.; Kim, Dongshin; Gyamfi-Yeboah, Frank

doi:10.1080/08965803.2021.1925504

Cited by 6 publications

(2 citation statements)

References 41 publications

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“…(2007) argued that since REITs have to pay a high dividend, therefore, using retaining earnings to finance future investment might not be feasible. An argument has been made that since a higher dividend payout lowers the retained earnings and the cash reserves (Soyeh et al. , 2021); therefore, such a taxable income cannot be accumulated as retained earnings by REITs (Devos et al.…”

Section: Theoretical Framework and Literature Reviewmentioning

confidence: 99%

“…Feng et al (2007) argued that since REITs have to pay a high dividend, therefore, using retaining earnings to finance future investment might not be feasible. An argument has been made that since a higher dividend payout lowers the retained earnings and the cash reserves (Soyeh et al, 2021); therefore, such a taxable income cannot be accumulated as retained earnings by REITs (Devos et al, 2016). A further argument is that the financing opportunity associated with using the pecking order theory indicates that REITs could only be financed by either debt or equity, an argument supported by the fact that REITs are high leverage.…”

Section: Theoretical Frameworkmentioning

confidence: 99%

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Performance evaluation and volatility of Turkey REITs during COVID-19 pandemic

Salami

Tanrıvermiş

2022

JPIF

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PurposeThis study aims to examine the performance and volatility of Turkey Real Estate Investment Trusts (Turkish REITs) as the world is adjusting to the new normal situation in every aspect of REITs' business activities.Design/methodology/approachThe prices of REITs were acquired from 26 Turkish REITs in this study, but owing to autocorrelation difficulties, 14 Turkish REITs were employed in the analysis. The ten-year long-term bond of the Turkish Government was also utilized and the period of data obtained was based on availability. The performance of Turkish REITs was evaluated using Sharpe's ratio and Treynor's ratio, and the volatility was assessed using MGARCH-BEKK.FindingsThe authors found out that Turkish REITs are constantly underperforming and the REITs' returns remain highly volatile and persistent. In addition, findings showed evidence of volatility clustering and the asymmetric impact of shocks. This study further revealed the uniqueness of each of the Turkish REITs due to the lack of evidence of multicollinearity.Research limitations/implicationsHowever, the limitation of this study is the constraint in obtaining more macro-economic variables of more than ten-years of Turkey's Government bond and the study focused mainly on Turkish REITs.Practical implicationsThe result suggests that since Turkish REITs are not mandatory to payout 90% of taxable earnings as dividends, high performance and an appropriate risk management approach are expected. The need for timely revealing performance of T-REITs and associated uncertainty may trigger better performance as discussed in the relationship between disclosure and performance which is recently emphasized in a recent study by Koelbl (2020). With current performance and associated uncertainty in Turkish REITs, the need to protect Turkish REITs investors is highly essential. The result further educates REIT investors that diversification benefits of REITs tend to reduce in extremely risky situations.Originality/valueThis is the first study in the context of Turkish REITs that comprehensively integrated market capitalization of REITs and simultaneous evaluation of performance and the volatility of the Turkish REITs as the world adjusts to the new normal.

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Section: Theoretical Framework and Literature Reviewmentioning

confidence: 99%