Finance

Business

Market capitalization

Equity (law)

Stock (firearms)

Real estate investment trust

Corporate governance

Biology

Financial economics

Capitalization rate

Shareholder

Engineering

Political science

Paleontology

Economics

Cash flow

Shareholder value

Stock market

Horse

Monetary economics

Mechanical engineering

Real estate

Journal of Real Estate Research

A real estate investment trust (REIT) is an intermediary that passes its cash flows and income to its shareholders. Hence, the efficiency of a REIT in providing this service should affect shareholder value. Using a sample of U.S. equity REITs from 1995 to 2017, we find a strong positive correlation between REIT value (measured by firm Q, market-to-book equity ratio, and capitalization rate) and lagged operational efficiency measures. The results also show that more efficient REITs are associated with average stock returns that are up to 3.88% higher than less efficient REITs. These results are robust across REIT sectors and common risk factors.

REIT Operational Efficiency and Shareholder Value