Wealth effects of REIT property-type focus changes: evidence from property transactions and joint ventures

SeungHan Ro and Alan J. Ziobrowski

Journal of Property Research, 2012, vol. 29, issue 3, 177-199

Abstract: Using a sample of 678 property portfolio changes (acquisitions, dispositions and joint ventures) of the US Real Estate Investment Trusts (REITs) during 1990--2009, we investigate how investors react to changes in a REIT’s property-type focus. We find a significant negative market reaction to acquisition and acquisitional Joint Venture events that decrease property-type focus. We also find some statistically insignificant evidence of a wealth benefit from dispositional events that increase property-type focus. Overall, our findings are consistent with explanation for the lack of diversification in REITs; investors prefer to make their own diversification decisions using narrowly focused REITs.

Date: 2012
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DOI: 10.1080/09599916.2012.703222

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