Financial Leverage in REITs: Evidence from Europe

Financial Leverage in REITs: Evidence from Europe

This study examines the impact of Leverage on the return of sixty-eight European domiciled Real Estate Investment Trusts between the period 2009 to 2019. In line with the existing literature, Total Total Shareholder Return was used as a measure of return in order to take into account the high mandat...

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Bibliographic Details
Main Author: dos Santos Ferreira, André
Format: Dissertation
Language:English
Published: ProQuest Dissertations & Theses 01-01-2021
Subjects:
Civil engineering
Finance
Financial leverage
Heavy construction
Investments
Market timing
Private equity
REITs
Securities markets
Stock exchanges
Trusts
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Summary:This study examines the impact of Leverage on the return of sixty-eight European domiciled Real Estate Investment Trusts between the period 2009 to 2019. In line with the existing literature, Total Total Shareholder Return was used as a measure of return in order to take into account the high mandatory payout ratio of REIT regimes. The main findings show that, Leverage presents a positive relationship with returns in the analysed period. However, this relationship is significant only for REITs domiciled in Northern Europe and Western Europe. The findings also evidence a superior explanatory capacity of Fama and French's Three-Factor model, as compared with Markowitz's CAPM model, in explaining the REIT's returns. This study also highlights the differences in the return obtained by REITs domiciled in different parts of Europe. These findings are consistent with the existing literature on the behaviour of Leverage in periods of economic recovery.
ISBN:9798382178486