Abstract
Executive Summary. Variance in returns and riskadjusted returns of six real estate investment trust (REIT) property types were analyzed for rent’s connection to operating business. We find that hotel REITs where real estate rents are connected to hotel operations has performed poorly, and retail mall and outlet REIT returns where rents are tied to sales have also had lower risk-adjusted returns. One surprise was that seniors housing REIT returns had average variance. Further analysis found the operations component of healthcare was separated from the real estate component in these REITs. These results place in question the value of the new Taxable REIT Subsidiary law available in 2001, as it may create higher return variance and lower riskadjusted returns.
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