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Modeling Different REIT Cash Flows

In: Handbook of Investment Analysis, Portfolio Management, and Financial Derivatives In 4 Volumes

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  • Tamala Amelia Manda

Abstract

The accuracy and appropriateness of discounted cash flows (DCFs) have been debated for years in academia and industry. Broadly, for most valuations, appraisers use accounting cash flows (ACFs) in determining present values (PVs) of firms. Some unique industries such as the real estate investment trusts (REITs) require customized DCFs to account for their capital structure among other factors. Fernández (2004, 2007) suggested that customized DCFs include debt cash flows, equity cash flows, free cash flows, and capital cash flows. The customized cash flows reveal different PVs for REIT firms. Furthermore, robustness results illustrate that customized DCFs are sensitive to selected macroeconomic (debt, equity, and funds from operations) and management (board and executive) variables. Fundamentally, the results are generalizable to the global REIT industry.

Suggested Citation

  • Tamala Amelia Manda, 2024. "Modeling Different REIT Cash Flows," World Scientific Book Chapters, in: Cheng Few Lee & Alice C Lee & John C Lee (ed.), Handbook of Investment Analysis, Portfolio Management, and Financial Derivatives In 4 Volumes, chapter 92, pages 3019-3075, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789811269943_0092
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    Keywords

    Financial Accounting; Financial Auditing; Mutual Funds; Hedge Funds; Asset Pricing; Options; Portfolio Analysis; Risk Management; Investment Analysis; Momentum Analysis; Behavior Analysis; Futures; Index Futures; CDCs; Financial Econometrics; Statistics; Financial Derivatives; Financial Accounting;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G1 - Financial Economics - - General Financial Markets
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing
    • G3 - Financial Economics - - Corporate Finance and Governance

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