An Empirical investigation on the relative performance of real estate investment trust and real estate fund
focusing on Korean case
The objective of this thesis is to empirically investigate the determinants of the returns to holding Real Estate Investment Trust (REIT) and Real Estate Investment Fund (REF) by using firm-level panel data covering 129 REIT and REF from Korea for the period of 2001 through 2018. Through the panel regression analyses, the following results are obtained. It is shown that the company status as REIT or REF is not statistically significant factor for Return on Asset (ROA) and that there is no statistically significant difference between stock exchange listed REIT and REF and non-listed REIT and REF in return earnings. Nonetheless, the indicator of scale economy is shown to positively affect returns: one percent increase in asset raises ROA by 0.014 percent; and, the effect of the firm size is shown to be non-linear, i.e., increasing with decreasing rate indicating diminishing marginal returns that is consistent with the conventional microeconomic theory. The results also show that capital structure has a negative impact on the return: one percent increase in the liability to assets ratio decrease 0.314 percent in ROA. REIT is shown to be more responsive than REF in terms of the leverage effect on the return. Finally, it is shown that, ceteris paribus, highly levered firms are inflicted with a larger negative shock inflicted by that recent global financial crisis (GFC).
Regarding policy implication of REIT and REF in Developing Bangladesh, solving supply side constraint of housing in populated Bangladesh, real estate investment through REIT and REF may be a good alternative and by legal and institutional framework setting the country may introduce these indirect investment vehicles in the country.
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