Performance Determinants of Malaysian Real Estate Investment Trusts
DOI:
https://doi.org/10.11113/jt.v73.4333Keywords:
REITs, determinants, property allocation strategyAbstract
The aim of this paper is to identify determinants of Malaysian real estate investment trust (REITs). By identifying the correct combination of these determinants, it able to assist the REITs companies to construct their property allocation strategy (PAS). However, studies on REITs’ performance in Malaysia showed few arguments on Malaysian REITs. Despite the evidence on potential for diversification, Malaysian REITs received inadequate response from institutional investors. Meanwhile the development of REITs in United States (US) started in early 1960s and it underwent significant cyclical performance and structure changes. Therefore, understanding of the literature review on the weaknesses and strengths of US REITs industry is essential. Furthermore, the lack of local study on these determinants, it is a research gap which can be explored in Malaysian REITs. The correct combination of determinants component contribute toward superior performance on REITs. Based on these reasons, REITs determinants that trigger the performance of Malaysian REITs warrant special attention and investigation. Through the literature review done on REITs determinants, this study manage to design the property allocation strategy for Malaysian. This beneficial for both REITs firm to construct their own PAS to maximize distribution as well as institutional investor to evaluate REITs investment. All in all, ramification of Malaysian REITs determinants helps to improve Malaysian REITs industry.
References
Lee, Chyi Lin and Ting, Kien Hwa. 2009. The Role of Malaysian Securitised Real Estate in a Mixed-asset Portfolio. Journal of Financial Management of Property and Contruction. 14(3): 208–230.
Newell, Graeme, Ting, Kien Hwa and Acheampong Peter. 2002. Listed Property Trust in Malaysia. Journal of Real Estate Literature. 10(1): 109–18.
Sing, Tien F., Ho,K. H. D. and Mak, Mei F. 2002. Real Estate Market Reaction to Public Listings and Acquisition News of Malaysian REITs. Journal of Real Estate Portfolio Management. 8(3): 209–227.
Ting, K. H. 2002. Listed Property Companies in Malaysia: A Comparative Performance Analysis. Paper presented at the 7th Pacific Rim Real Estate Society Conference. Christchurch,
Abdul J., Rohaya and Hishamuddin Mohd Ali. 2008. The Impact of Malaysian Real Estate Investment Trust in Portfolio Diversification. Working paper presented at International Real Estate Research Sysposium, (IRERS) 2008. Kuala Lumpur¸ Malaysia, April.
Hishamuddin Mohd Ali. 2006. Size Effect on the Performance of Listed Real Estate Companies. Working paper presented at International Real Estate Research Sysposium,(IRERS) 2006, Kuala Lumpur¸ Malaysia.
Lee, Yim Mei Janice and Mohd Ali, Dr. Hishamuddin and Lee, Chyi Lin, 2005. The New Real Estate Investment Trusts in Malaysia: Lessons From Listed Property Trusts. First Real Estate Educators and Researchers Malaysia (REER) Seminar, UTM, City Campus Kuala Lumpur(unpublished), Sept.
Morri, Giacomo and Cristanziani, Fabio. 2009. What Determines the Capital Structure of Real Estate Companies? An Analysis of the EPRA/NAREIT Europe Index. Journal of Property Investment & Finance. 27(4): 318–372.
Boudry, Walter I., Kallberg, Jarl, G. and Liu, Crocker, H. 2007. An Analysis of REIT Security Issuance Decisions. University of North Carolina. U.S.
Ott, Steven, H, Riddiough, Timothy, J. and Yi, Ha-Chin. 2005. Finance, Investment and Investment Performance: Evidence from the REIT Sector. Real Estate Economic. 33(1): 203–235.
Chan, Su Han, Erickson, John, and Wang Ko. 2003. Real Estate Investment Trusts: Structure, Performance, and Investment Oppurtunities. New York, Oxford University Press.
Zietz, Emily N., Sirmans, G. Stacy and Friday, H. Swint. 2003. The Environment and Performance of Real Estate Investment Trust. Journal of Real Estate Portfolio Management. 9(2): 127–165.
Ambrose, Brent W. and Linneman, Peter. 2001. REIT organizational Structure and Operating Characteristics. The Journal of Real Estate Research. 21(3): ABI/INFORM Global pg. 141, May/Jun.
Ting, K. H. 1999. The Listed Property Trust Industry in Malaysia: Factors Constraining its Growth and Development. Proceeding of International Real Estate Society Conference, Kuala Lumpur.
Benefield, Justin. D. 2006. Performance Differences in Property-Type Diversified Versus Specialized Real Estate Investment Trusts: A Portfolio Approach. Thesis Dissertation. The University of Alabama, Tuscaloosa Alabama. UMI Number: 3223290.
Capozza, D. R., Lee, S. 1995. Property Type, Size and REIT Value. Journal of Real Estate Research. 10(4): 363–79.
Anikeeff, Michael A., Benjamin, John D., Chinloy, Peter and Megbolugbe, Isaac F. 2003. Healthcare Real Estate: Excess Capacity and Growing Costs. Journal of Real Estate Literature. 15(3): 355–382.
Danielsen, Bartley R. and Harrison, David M. 2007. The Impact of Property Type Diversification on REIT Liquidaty. Journal of Real Estate Portfolio Management. 13(4).
Newell, Graeme and Peng, Hsu Wen. 2006. The Role of Non Traditional Real Estate Sectors in REIT Portfolios. Journal of Real Estate Portfolio Management. 12(2): 155–166.
Newell, Graeme and Peng, Hsu Wen. 2005. The Significance of Emerging property Sectors in Property Portfolios. Pacific Rim Property Research Journal. 12(2): 177–197.
Young, Michael S. 2000. REIT Property-type Sector Integration. Journal of Real Estate Research. 19(½):3–21.
Newell, Graeme and Seabrook, Ross. 2006. Factors Influencing Hotel Investment Decision Making. Journal of Property Investment and Finance. 24(4): 279–294. DOI 10.1108/1435780610674499.
Brady, Peter J. and Conlin, Michael E. 2004. The Performance of REIT-Owned Properties and the Impact of REIT Market Power. Journal of Real Estate Finance and Economics. 28(1): 81–95.
Kim Hyunjoon, Mattila Anna. S and Gu Zheng. 2002. Performance of Hotel Real Estate Investment Trusts: A Comparative Analysis of Jensen Indexes. International Journal of Hospitality Management. 21: 85–97.
Nikamp P., Klamer P and Gorter C. 2002. Retail Investment by Real Estate Investment Trusts: A Comparative Analysis of Local Retail Returns for the United States. Journal of Housing and Built Environment. 17: 109–125.
Brueggeman, William B. 1996. The Relative Attraction of CBD Versus Suburban Locations in Major Office Markets. Real Estate Finance. 13(3): 15–21.
Myer, F. C. Neil and Webb, James R. 2000. Management Styles of REIT Funds. Journal of Real Estate Portfolio Management. 6(4): 339–348.
Capozza, Dennis R. and Seguin, Paul J., Focus. 1999. Transparency and Value: The REIT Evidence. Real Estate Economics. 27(4): 587–619.
Morri, Giacomo and Beretta, Christian. 2008. The Capital Structure Determinants of REITs. Is it a Peculiar Industry? Journal of European Real Estate Research. 1(1): 6–57.
Mueller, Glenn R. and Anikeeff, Michael A. 2001. Real Estate Ownership and Operating Businesses: Does Combining Them Make Sense for REITs? Journal of Real Estate Portfolio Management. 7(1): 55–65.
Sing, Tien F. and Ling, Sze C. 2003. The Role of Singapore REITs in a Downside Risk Asset Allocation Framework. Journal of Real Estate Portfolio Management. 9(3): 219–235.
Ro, SeungHan and Ziobrowski, Alan J. 2009. Does Focus Really Matter? Specialized vs Diversified REITs. Journal of Real Estate Finance Economic. DOI.10.1007/s11146-009-9189-8.
Benefield, Justin D., Anderson Randy I. and Zumpano Leonard V. 2008. Performance Differences in Property Type Diversified Versus Specialized Real Estate Investment Trusts (REITs). Review of Financial Economics. DOI; 10.1016/j.rfe.2008.04.001.
Cheng, Ping and Roulac, Stephen E. 2007. Measuring the Effectiveness of Geographical Diversification. Journal of Real Estate Portfolio Management. 13(1): 29–44.
Worzala, E and V. Bajtelsmit. 1997. Real Estate Asset Allocation and Decision Making Framework Used by Pension Fund Managers. Journal of Real Estate Portfolio Management. 3(1): 47–56.
Redman, Arnold L. and Manakyan, Herman. 1995. A Multivariate Analysis of REIT Performance by Financial and Real Asset Portfolio Characteristics. Journal of Real Estate Finance and Economics. 10: 169–175.
Holden, Meg Parker and Redding, Kim. G. 1994. The Geographic Distribution of REIT Properties. Real Estate Review. 24(1): Spring.
Webb, R. B. and W. McIntosh. 1986. Real Estate Acquisition Rules for REITs: A Survey. Journal of Real Estate Research. 1(1): 77–98.
Wilhelmsson, Mats. 2009. Construction and Updating of Property of Property Price Index Series: The Case of Segmented Markets in Stockholm. Property Management. 27(2): 119–137.
Tsolacos, Sotiris, McGough, Tony and Thompson, Bob. 2005. Affordability and Performance in the Industrial Property Market. Journal of Property Investment & Finance. 23(4): 311–328.
Ling, David C. and Naranjo, Andy. 2002. Commercial Real Estate Return Performance: A Cross- Country Analysis. Journal of Real Estate Finance and Economics. 24(½): 119–142.
McCluskey, W. J., Deddis, W. G., Lamont, I. G and Borst, R. A. 2000. The Application of Surface Generated Interpolation Models for the Prediction of Residential Property Values. Journal of Property Investment & Finance. 18(2): 162–176.
Abdul Hamid Mar Iman. 2006. Basic Aspects of Property Market Research. Penerbit UTM.
Anderson, Randy I., Liang Y. and Shain J. R. 2001. Deriving REIT Returns by Economic Location. Real Estate Finance. 18(3): 14–19.
Mahoney, Joseph, Malpezzi, S. and Shilling, J. D. 2000. Implications of Income Property Stock Data for Real Estate Investment Portfolio Location. Real Estate Finance. 16(4): 53–66.
Mahoney, Joseph, McCarron, Shelley, Miles, Mike and Sirmans, C. F. 1996. Location Differences in Private and Public Real Estate Investment. Real Estate Finance. 13(2): 52–64.
Campbell, Robert, D., Petrova, Milena, Sirmans, C. F. 2003. Wealth Effects of Diversification and Financial Deal Structuring: Evidence from REIT Property Portfolio Acquisitions. Real Estate Economics. 31(3): 347–366.
Spee, Roel and Douw, Wim. 2003. Cost Reduction Location Strategies. Journal of Corporate Real Estate. 6(1): 30–38.
Anderson, Randy I., Fok, Robert, Springer, Thomas and Webb, James. 2002. Technical Efficiency and Economies of Scale: A Non-parametric Analysis of REIT Operating Efficiency. European Journal of Operational Research. 139: 598–-612.
Linneman, Peter. 1997. Forces Changing the Real Estate Industry Forever. Wharton Real Estate Review. 1: 1–12.
Devaney, Michael and Weber, William L. 2005. Efficiency, Scale Economies, and the Risk/ Return Performance of Real Estate Investment Trusts. The Journal of Real Estate Finance and Economics. 31(3): 301–317.
Yang, Shiawee. 2001. Is Bigger Better? Reexamining the Scale Economies of REITs. Journal of Real Estate Portfolio Management. 7: 67–78.
Bers, Martina and Thomas Springer. 1998. Sources of Scale Economies for REITs. Real Estate Finance. 14(Winter): 47–56.
Bers, Martina and Thomas, Springer. 1998. Differences in Scale of Economies Among Real Estate Investment Trusts: More Evidence. Real Estate Finance. 15: 37–44.
Bers, Martina and Thomas Springer. M. 1997. Economic of Scale for Real Estate Investment Trust. Journal of Real Estate Research. 14(3): 275–290.
Vogel, John. 1997. Why the New Conventional Wisdom about REITs is Wrong. Real Estate Finance. 14(2): 7–12.
Below, Scott D., Stansell, Stanley R. and Coffin, Mark. 2000a. The Determinants of REITs Institutional Ownership: Test of the CAPM. Journal of Real Estate Finance and Economics. 21(3): 263–278.
Below, Scott D., Stansell, Stanley R. and Coffin, Mark. 2000b. Institutional Investment in REIT Common Stocks; an Examination of the Prudent Man Investment Hypotheses. Journal of Real Estate Finance Portfolio Management. 6(2): 113–30.
Kilpatrick, John A. 2002. Agency Costs and the Determinants of the Capital Structure of REITs. Degree of Doctor of Philosophy Dissertation, Moore School of Business, University of South Carolina.
Howe, John S. and Shilling, James D. 1988. Capital Structure Theory and REIT Security Offerings. The Journal of Finance. 43(4): 983–993, Sept.
Erickson, John R. and Fredman, Albert J. 1988. Estimating the Cost of Capital for a REIT: A Case Study. Real Estate Appraiser and Analyst. 53(3): 39–47.
Cannaday, Roger E. and Yang, Tyler T. 1996. Optimal Leverage and Strategy: Capital Structure in Real Estate Investments. Journal of Real Estate Finance and Economics. 13: 263–271.
Ertugrul, Mine and Giambona, Erasmo. 2010. Property Segment and REIT Capital Strucure. Journal Real Estate Finance Economic. DOI 10.1007/s11146-009-9229-4.
Young, Philip J. and Elayan, Fayez A. An Investigation into the Shareholder Wealth Effects of REIT Acquisitions. Real Estate Finance. 19(4): 27–32.
Capozza, Dennis, R. and Seguin, Paul, J. 2000. Debt, Agency, Management Contracts in REITs: The External Advisory Puzzle. Journal of Real Estate Finance and Economic. 20(2): 91–116.
Capozza, Dennis R. and Seguin, Paul J. 1998. Managerial Style and Firm Value. Real Estate Economic. 26(1): 131–150.
Benefield, Justin, D. and Pyles, Mark, K. 2009. Internally versus Externally Advised Non-Brokerage Real Estate Firms. The Journal of Alternative Investments. 12(1): 39.
Lee, Chyi Lin, Robinson, Jon and Reed, Richard. 2007. Downside Systematic Risk in Australian Listed Property Trusts. Conference paper at 13th Pacific Rim Real Estate Society Conference, Fremantle, Western Australia, 21–24 January.
Friday, H. Swint and Sirmans, G. Stacy. 1998. Board of Director Monitor and Firma Value in REITs. Journal of Real Estate Research. 16(3): 411–427.
Miller, Stephen, M. and Springer, Thomas, M. 2007. Cost Improvements, Returns to Scale, and Cost Inefficiencies for Real Estate Investment Trusts. University of Connecticut, Department of Economics Working Paper Series 2007-05, RePEc, http://repec.org/, February.
Miller, Stephen, M., Clauretie, Terrence, M. and Springer, Thomas, M. 2005. Economies of Scale and Cost Efficiencies: A Panel-data Stochastic- Frontier Analysis of Real Estate Investment Trusts. University of Connecticut, Department of Economics Working Paper Series 2001-21, July 2005. Paper presented at the Money Macro and Finance Research Group conference Efficiency Analysis in Macroeconomics and Finance at the University of Essex, United Kingdom.
Goetzmann, William N. and Kumar, Alok. 2008. quity Portfolio Diversification.Review of Finance. DOI:10.1093/rof/rfn005. 1–31.
Lee, Ming-Long, Lee, Ming-Tee and Chiang, Kevin C. H. 2008. Real Estate Risk Exposure of Equity Real Estate Investment Trusts. Journal of Real Estate Finance and Economic. 36: 165–181.
Casey, K. Michael, Summer, G. and Packer, J. 2006. REIT Capital Structure: is it Market Imposed? Managerial Finance. 32(12): 981–987.
Ciochetti, Brian A., Craft, Timothy M. and Shilling, James D. 2002. Institutional Investors' Preferences for REIT Stocks. Real Estate Economics. 30(4): 567–593.
Craft, Timothy Michael. 2001. Institutional Investment in the Real Estate Investment Trust Market. Doctorate Thesis Dissertation, University of Wiscousin–Madison, UMI Number: 3020726.
Chan S. Han, Leung W. Kin and Wang Ko. 1998. Institutional Investment in REITs: Evidence and Implications. The Journal of Real Estate Research. 16(3): 357–374.
Lin, C. Y, Rahman, H and Yung, K. 2009. Investor Sentiment and REIT Returns. Journal Real Estate Finance Economic. 39: 450–471.
Lee, Yim Mei Janice, Mohd Ali, Hishamuddin and Lee, Chyi Lin. 2006. The new real estate investment trusts in Malaysia: Lessons from Listed Proeprty Trusts. Research Working Paper. CRES, UTM.
Campbell, Robert, D. and Sirman, C. F. 2002. Policy Implication of Structural Options in the Development of Real Estate Investment Trusts in Europe: Lessons from the American Experience. Journal of Property Investment and Finance. 20(4): 388–405.
Downloads
Published
Issue
Section
License
Copyright of articles that appear in Jurnal Teknologi belongs exclusively to Penerbit Universiti Teknologi Malaysia (Penerbit UTM Press). This copyright covers the rights to reproduce the article, including reprints, electronic reproductions, or any other reproductions of similar nature.
