Abstract
Executive Summary. This study examines the long-run performance of real estate investment trusts (REITs) following seasoned equity offerings (SEOs). Over 61% of the 178 REITs examined underperform an index of REITs for the first year after the issue, and over 72% of the firms underperform the index for three years following the issue. The sample is partitioned according to book-to-market value of equity ratio, market value of equity and REIT type. The results reveal that all REIT subsamples except the highest book-to-market quintile and the lowest size quintile exhibit the same patterns of underperform-ance observed in the full sample. In addition, equity REITs underperform the index for both one and three years while non-equity REITs underperform for three years but exhibit no underperformance for one year following the SEO.
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