Institutional Segmentation and Dynamic REIT Demand

Frank Gyamfi-Yeboah, Cayman Seagraves and Philip Seagraves

Journal of Real Estate Portfolio Management, 2022, vol. 28, issue 1, 13-32

Abstract: Since the REIT form of real estate securitization began, the variety of property types available for investment has grown while institutions have increasingly played a more prominent role in the REIT market. If different types of institutions have no property sector preferences, their investments would be the same across REIT property types and unchanging over time. Understanding investor clientele and investment behavior of institutions is of broad interest to REIT managers and the investment community. In this paper, we explore the institutional investment behavior among the REIT property sectors. We examine the relationship between institutional ownership and REIT property types from 1990 to 2019 using a rolling Tobit regression model with control variables for market risk, liquidity, and prudence factors. The results show that while institutions have consistently favored liquidity and low transaction cost, REIT property sector preferences exist and have been dynamic over time. The factors behind specific institutional sector preferences appear to be driven by a desire to exploit informational advantages.

Date: 2022
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DOI: 10.1080/10835547.2022.2069648

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