Analysis of Korean real estate investment trusts and share price determinants

Korean REITs started as CR-REITs, vehicles with specific objectives to relieve real estate liabilities off the balance sheets of distressed companies and liquidize them back into the real estate market. CR-REITs were finite-lived, closed-end, passively managed vehicles with public offerings heavily weighed to institutional investors. Not only was REITs a new investment vehicle but CR-REITs and its AMC were also brand new companies with no proven track records. A finite-lived REIT has two sources of income, the first being monthly rental income which is paid out as dividends and the second being the capital gain redistributed at reversion when the REIT is terminated. Analysis shows that Korean REIT prices are more connected with appreciation earnings than rental income earnings specifically due to their finite-lived, passively managed structure. Not to be mistaken, average annual dividend yields were at historically around 9% giving them the highest REIT returns in the Asian market. This thesis aims to study the overall REITs market in Korea and conduct detailed analysis on REITs stock price determinants using various factors in the Korean financial and real estate market. Individual Korean REITs were analyzed in detail sorting out categories such as stock price, shareholder characteristics, underlying assets, Net Asset Value, Earnings and Dividends. REITs Linear regression analysis on Korean REIT stock returns were conducted to show performance relation with the financial market. Further P/NAV analysis were focused on analyzing the different P/NAV patterns and eventually developed into REIT price connected with its underlying assets, especially with the appreciation value of the land. Additional analysis on Korean REIT P/E ratios were conducted using various factors such as sales & lease back, buy-back options and asset composition.

Department dc:contributor.department

Massachusetts Institute of Technology. Dept. of Architecture.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2007

Authors dc:creator

• Lee, Haegyu
• Seo, Wonho

Advisor dc:contributor.advisor

• David Geltner.

• Architecture.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/42030

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/42030