CW-REITS: A new asset class for the real estate industry?

Lucia Gibilaro and Gianluca Mattarocci

ERES from European Real Estate Society (ERES)

Abstract: REITs are currently evaluating the opportunity to collect resources for the real estate investment through equity crowdfunding solutions and the US is the main market in which REIT equity crowdfunding was adopted after the JOBS act, amending the Regulation A. The main advantage of the new real estate vehicle is the access to individuals with limited wealth that accept to invest in real estate investment vehicles not listed that are prevalently traded on line. The focus of the literature is prevalently on the cost savings offered by on line platforms that allow to achieve a net return of investment higher than other REITs due to the lower transaction costs that characterize the new asset class in the real estate industry.The analysis considers all the e-REITs incorporated in the time period 2015-2018, collects data about the Net Asset Value and the dividend payments with a quarterly frequency data, and compares the performance of e-REITs and other REITs in the three year time horizon. Results show that the performance of e-REITs is more stable over time even if the monthly return is significantly lower than other REITs. The lack of correlation between the performance achieved by this new type of REITs and traditional REITs demonstrates their usefulness for diversification purposes and different expected advantages for including the new asset class in a diversified portfolio of financial assets.

Keywords: asset allocation; Crowdfunding; Performance; regulation; REIT (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2019-01-01
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Persistent link: https://EconPapers.repec.org/RePEc:arz:wpaper:eres2019_152

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