market where informed investors wait until shares become
available on the secondary
market to purchase them. It’s
analogous to purchasing a
time-share unit. Why buy it
on the primary market when
you can buy it at a discount in
the secondary market, especially since cash flows are now
observable and there is more
transparency?
The RELP findings do have
some implications to private and
SEC-registered, unlisted REITs
to the extent that their investor
base is similar to public RELPs.
In fact, some of the RELP
sponsors have also sponsored
private or SEC-registered,
unlisted REITs.
the one hand is muted by Maryland incorporation.
Portfolio: Are REITs part of
your investment portfolio?
Liu: Absolutely. I have them in
my retirement account. I purchased a passive REIT mutual
fund since I wanted a diversified
portfolio of REITs.
Investors should realize that
REITs are not only stock, but
they are also driven by the underlying real estate market. The
latter is more like a bond—a
long-term hold even though the
stock component makes REITs
more liquid. F
Brad Case is NAREIT’s vice
president, research & industry
information.
Prepare your community for tomorrow
with Connexion Technologies…
Portfolio: You found that “firms
with stronger corporate governance structures not only have
higher initial IPO valuations,
but also have better long-term
operating performance than
their peers.” Does that result
imply anything going forward
for REIT investors relative
to non-REIT real estate
investors?
Liu: Yes, it does. REI Ts currently have one of the more
transparent corporate governance structures of all industrial
groupings. The problem with
REIT corporate governance,
which I’m sure management
doesn’t want to hear about, is
that a lot of REITs are incorporated in Maryland, which might
not necessarily be good for
shareholders due to their pro-management provisions.
Our study finds that there is
at least a 20 percent discount for
REIT IPOs when the REIT is
incorporated in Maryland, since
there is less of an alignment of
shareholder and management
interests. Thus, transparency on
You can provide for the ever-changing technological needs of residents
without touching your budget. By partnering with Connexion Technologies
to install a cutting-edge Fiber to the Home network in your community, your
residents can enjoy the best entertainment and communications services
delivered over a fiber-optic network. This network will also be ready to
handle almost any new service that comes to market.
Find out more at www.connexiontechnologies.net
or contact us at 919.535.7329.
