Wagner, Dominik and Woltering, Rene-Ojas and Downs, David H. and Sebastian, Steffen (2022) The REIT Conversion Puzzle. JOURNAL OF REAL ESTATE RESEARCH, 44 (3). pp. 399-428. ISSN 0896-5803, 2691-1175
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Real Estate Investment Trusts (REITs) are a globally recognized form of real estate ownership that offer tax benefits at a corporate level. Despite their clear advantages, however, a significant share of potentially eligible Real Estate Operating Companies (REOCs) do not opt for conversion to a REIT structure. This paper examines 80 REOC-to-REIT conversions across 13 countries. We find REIT conversions are generally driven by the extent of country-specific tax benefits. They are also more likely following prior conversions by other REOCs, and in countries with a larger share of extant REITs. REIT conversions may be motivated by Net Asset Value (NAV) discounts, especially if management's compensation is highly equity-based. This illustrates the importance of aligning the interests of management and shareholders. On the other hand, relatively restrictive REIT criteria, such as the disclosure and taxation of hidden values during the conversion process, are associated with significantly lower conversion probabilities. Countries that have eased REIT criteria have subsequently seen significantly more conversions.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | AGENCY COSTS; DETERMINANTS; SPILLOVERS; GOVERNANCE; MODELS; FIRM; REITs; REOCs; conversion; agency conflicts |
| Subjects: | 300 Social sciences > 330 Economics |
| Divisions: | Business, Economics and Information Systems > Institut für Betriebswirtschaftslehre > Lehrstuhl für Immobilienfinanzierung (Prof. Dr. Steffen Sebastian) Business, Economics and Information Systems > Institut für Immobilienenwirtschaft / IRE|BS > Lehrstuhl für Immobilienfinanzierung (Prof. Dr. Steffen Sebastian) |
| Depositing User: | Dr. Gernot Deinzer |
| Date Deposited: | 08 Feb 2024 11:54 |
| Last Modified: | 08 Feb 2024 11:54 |
| URI: | https://pred.uni-regensburg.de/id/eprint/57497 |
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