7. Real Estate Investment Trusts
- H. Kent Baker and
- Greg Filbeck
Published Online: 2 APR 2013
Copyright © 2013 John Wiley & Sons, Inc. All rights reserved.
Alternative Investments: Instruments, Performance, Benchmarks, and Strategies
How to Cite
Case, B. (2013) Real Estate Investment Trusts, in Alternative Investments: Instruments, Performance, Benchmarks, and Strategies (eds H. K. Baker and G. Filbeck), John Wiley & Sons, Inc., Hoboken, NJ, USA. doi: 10.1002/9781118656501.ch7
- Published Online: 2 APR 2013
- Published Print: 18 MAR 2013
Print ISBN: 9781118241127
Online ISBN: 9781118656501
- principal–agent issues;
- capital market discipline
This chapter focuses on the return characteristics of commercial real estate investments made through real estate investment trusts (REITs). REITs enable investors to access the commercial real estate asset class indirectly through ownership of equity shares in a company whose assets consist primarily of commercial properties or mortgages and whose revenues derive primarily through commercial property leases or mortgage payments. Investments in equity shares of listed REITs preserve liquidity while exposing the investor to short-term fluctuations not related to property market developments. Historical performance data suggest stronger risk-adjusted returns for investments in listed REITs than for other real estate investments. This result may be attributable to differences in principal–agent issues, financing practices, and capital market discipline.