Equity REIT Property Acquisitions: Do Apartment REITs Pay a Premium?

William G. Hardin () and Marvin L. Wolverton ()
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William G. Hardin: Mississippi State University Mississippi State, MS 39762-9580, http://www.msstate.edu/
Marvin L. Wolverton: Washington State University Pullman, WA 99164, http://www.wsu.edu/

Journal of Real Estate Research, 1999, vol. 17, issue 1, pages 113-126

Abstract: Negotiation theory and implied agency costs provide the foundation for the research hypothesis that equity real estate investment trusts (EREITs) may have paid premiums when making real property acquisitions during the 1990s REIT boom. Using a simultaneous equations model and data from the Atlanta, Phoenix and Seattle apartment markets, this research finds that apartment EREITs have paid above market prices for property acquisitions. In Atlanta, a 26.1% premium was evident; in Phoenix, a 27.5% premium was evident; while in Seattle, a premium was not evident. At the property level, the returns to EREITs and private sector or non-securitized investors may differ substantially.

JEL-codes: L85 (search for similar items in EconPapers)
Date: 1999
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