The Relative Value of Public Non - Listed REITs

Paul J. Seguin

Journal of Real Estate Research, 2016, vol. 38, issue 1, 59-92

Abstract: In this paper, I evaluate equity claims to publicly registered, non-listed real estate investment trusts (REITs). Although market-determined equity prices for public non-listed REITs (PNLRs) are unavailable, I demonstrate that such equity claims are worth between 23% and 80% less than equity claims to identical underlying assets organized as listed REITs. Sources for losses include illiquidity, high transactions costs and sub-optimal capital, and organizational structures. An alleged advantage of PNLRs—higher current income—is unsustainable: REITs frequently reduce levels of promised returns to equity holders, only achieving these lower levels by issuing additional capital.

Date: 2016
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DOI: 10.1080/10835547.2016.12091438

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