GROWTH RATES OF PROPERTY TRUSTS : DOES IT MATTER?

Abstract

Asset growth continues to be an important corporate strategy undertaken by property trusts. Despite the importance of growth, much is still unestablished regarding the growth patterns and the relationship between asset growth and corporate performance among property trusts. Using a sample of 450 listed property trusts over a study period of 2001-2009, this dissertation is motivated towards expanding the property trust growth research. The research is driven towards addressing four research questions related to growth patterns, its determinants and its relationship with corporate performance. The findings reveal significant differences in the growth strategy of REITs by region and subsector; Asia Pacific REITs and Office & Industrial REITs displayed the highest rates of asset growth among regions and sectors respectively. Growth is found to be influenced by size; however this relationship was not observed based on corporate focus and firm age. Findings from fixed effects regression analysis support the hypothesis that asset growth enhances corporate performance; however decreasing returns to growth is observed. The empirical findings provide support for the presence of scaled economies, better asset management and increased firm competitiveness associated with growing its asset base. Furthermore, it might suggest that high annual growth might be associated overinvestment or bad judgment by property trust managers.