Open AccessInternational Real Estate Review
Author(s) -
Lawrence Kryzanowski,
Margarita Tcherednitchenko
Publication year - 2007
Publication title -
journal of the asian real estate society
Language(s) - English
Resource type - Journals
ISSN - 1029-6131
DOI - 10.53383/100081
Subject(s) - real estate investment trust , equity (law) , diversification (marketing strategy) , initial public offering , risk–return spectrum , composite index , real estate , business , portfolio , financial economics , economics , monetary economics , stock market index , excess return , stock market , finance , stock exchange , paleontology , context (archaeology) , horse , marketing , political science , law , biology
The return performance and factor sensitivities of Canadian equity real estate investment trusts (E-REITs) are examined. Today, typical and average Canadian E-REIT IPOs are correctly priced based on first- day and subsequent short-run returns. The overpricing evident earlier in the 1993-96 period for typical and average E-REIT IPOs has corrected. E-REITs are equity investments with about one-half the market risk, and greater ensitivity to interest-rate changes, than the S&P/TSX Composite Index. E-REITs outperformed the S&P/TSX Composite over the 1996-2004 period on a return, risk, and market- and/or risk-adjusted basis. Thus, E-REITs provided material diversification benefits with no sacrifice in return, when added to a common stock portfolio during the studied period.