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The Financial Performance of REITs Following Initial Public Offerings

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Abstract

This study examines changes in operating performance among real estate investment trusts following an initial public offering (IPO). The purpose is to determine whether there is an enhancement in the value of the underlying asset that is related to the IPO. We separately analyze equity, mortgage and diversified REITs. We also compare the operating performance of recent IPOs to those of earlier years to address the impact of the 1993 Revenue Reconciliation Act on institutional investors’ demand for REIT stock. Unlike previous analyses of industrial firms, REITs were found to have significant increases in Return on Assets and selected measures of financial performance. The post-IPO cumulative stock price decline and recovery is illustrated.

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  • Roger M. Shelor & Dwight C. Anderson, 1998. "The Financial Performance of REITs Following Initial Public Offerings," Journal of Real Estate Research, American Real Estate Society, vol. 16(3), pages 375-388.
    • Handle: RePEc:jre:issued:v:16:n:3:1998:p:375-388
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    1. James L. Kuhle & Carl H. Walther & Charles H. Wurtzebach, 1986. "The Financial Performance of Real Estate Investment Trusts," Journal of Real Estate Research, American Real Estate Society, vol. 1(1), pages 67-75.
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    Cited by:

    1. Isik, Ihsan & Topuz, John C., 2017. "Meet the “born efficient” financial institutions: Evidence from the boom years of US REITs," The Quarterly Review of Economics and Finance, Elsevier, vol. 66(C), pages 70-99.

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    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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