Please use this identifier to cite or link to this item: https://scholarbank.nus.edu.sg/handle/10635/222778
Title: ANNOUNCEMENT EFFECTS OF LEVERAGE LIMITS ON S-REITS
Authors: TAN JUN SHI JAMES
Keywords: Real Estate
RE
2019-2020 RE
Sing Tien Foo
Event study
Leverage limits
S-REITs
Announcement Effects
DRE
Department of Real Estate
Joseph Ooi Thian Leong
Event Study Methodology
Issue Date: 22-May-2020
Citation: TAN JUN SHI JAMES (2020-05-22). ANNOUNCEMENT EFFECTS OF LEVERAGE LIMITS ON S-REITS. ScholarBank@NUS Repository.
Abstract: Having first started in 2002, the Singapore Real Estate Investment Trust (S-REIT) market has increasingly become a global REIT hub with 43 listed S-REITs with a total market capitalization of over S$110 billion as of 2020. With a unique structure that requires REITs to distribute at least 90% of their net income to enjoy tax transparency, S-REITs are highly dependent on external debt and equity financing to fund S-REITs’ growth. While many academic studies have researched into capital structure of REITs, few studies have examined the effects of leverage limits imposed upon REITs. Hence, this paper aims to investigate the announcement effects of changing leverage limits imposed upon REITs that are publicly listed on the Singapore Exchange. By analysing all the announcements published by the government via the Monetary Authority of Singapore between 2014 and 2019, this paper uses the abnormal returns to measure market reactions to these announcements made. Data of all listed S-REITs were collected and organised against the particular event dates. Significant results on S-REIT price changes were observed around the announcement of the recent 2019 consultation paper proposing an increase in the leverage limits for S-REITs. The S-REIT share values increased by 1.84% over the three-day period surrounding the announcement date. However, the results in relations to the announcements made in 2014 and 2015 were mixed. Cross-sectional regressions were conducted to further analyse the determinants of the abnormal returns. The results show that the two variables, which are market to book ratio and a dummy indicating where a REIT has a credit rating, are statistically significant indicating positive explanatory effects on the abnormal returns. While keeping other control variables constant, it was interesting to note that the interactive terms of the two variables have statistically significant but inverse relationships with abnormal returns.
URI: https://scholarbank.nus.edu.sg/handle/10635/222778
Appears in Collections:Bachelor's Theses

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