Long Run Underperformance in REITs Following Seasoned Equity Offerings

Shawn Howton, Shelly Howton and H. Friday

Journal of Real Estate Portfolio Management, 2000, vol. 6, issue 4, 355-363

Abstract: Executive Summary. This study examines the long-run performance of real estate investment trusts (REITs) following seasoned equity offerings (SEOs). Over 61% of the 178 REITs examined underperform an index of REITs for the first year after the issue, and over 72% of the firms underperform the index for three years following the issue. The sample is partitioned according to book-to-market value of equity ratio, market value of equity and REIT type. The results reveal that all REIT subsamples except the highest book-to-market quintile and the lowest size quintile exhibit the same patterns of underperform-ance observed in the full sample. In addition, equity REITs underperform the index for both one and three years while non-equity REITs underperform for three years but exhibit no underperformance for one year following the SEO.

Date: 2000
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DOI: 10.1080/10835547.2000.12089619

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