FINANCIAL ANALYSIS AND STOCK RETURN OF REITS: AN INTERNATIONAL PERSPECTIVE

Abstract

This paper examines the performance of equity REITs listed in 13 countries around the world between 2010 and 2017. From the descriptive analysis, the USA and Hong Kong were found to excel in term of stock returns. The paper further investigated the determinants of stock performance using financial indicators of REITs traded in the 13 markets. Using panel regression, results show that market cap, market-to-book ratio, earnings per share, dividend yield, return on equity and actual growth have a significant influence on the stock performance of REITs. The relationship was further analysed from different perspectives, namely: (a) Periods of different volatility (b) Continental differences (c) Countries difference (d) Market Cap (e) Top 10 REITs. Results have shown that financial indicators have lesser relevance in explaining risk-adjusted returns in times of higher volatility. Similar results were shown when exploring the relationship in individual markets. A composite portfolio of international REIT shows otherwise, which indicate a possibility of diversification among REITs. Looking at markets individually, the market-to-book ratio has stood out as the top financial indicator to explain stock performance. The paper also found that the relationship does not differ between REITs of varying sizes.