Listed Property Companies Research Articles

Value Added from Money Managers in Private Markets? An Examination of Pension Fund Investments in Real Estate

We evaluate the economics of financial intermediation in alternative assets by investigating the allocation and performance of pension fund investments in real estate, the most significant alternative asset class for institutional investors. We document substantial heterogeneity in real estate investment cost and performance, determined by two main factors: mandate size and investment approach. Larger pension funds are more likely to invest in real estate internally, have lower costs, and higher net returns. Smaller pension funds invest primarily in direct real estate through external managers and fund-of-funds, and disregard listed property companies. Overall, we find that delegating real estate investment management to financial intermediaries increases costs and disproportionally reduces returns.

The reliability of investment property fair values under IFRS

PurposeThe valuation of property companies and fair value accounting for investment properties under IFRS are closely affiliated with each other. This is because property companies are commonly valued using net asset value as a valuation technique. The term net asset value represents the fair value of a property company's assets less its liabilities and therefore can easily be determined, as under IFRS investment property is often reported using a fair value approach. The purpose of this paper is to examine the perception of fair value estimates for many companies' main asset: investment properties. With this it contributes to the stream of real estate finance literature that investigates net asset value deviations from property companies' share prices and to the stream of accounting literature that investigates fair value accounting.Design/methodology/approachThe association between the net asset values of European listed property companies and their market prices are investigated. Observed deviations are related to a wide set of variables using panel (unbalanced) OLS‐regressions.FindingsIt is found that net asset value usually departs from the market capitalization of European property companies. It is also found that those deviations are a result of insufficient reliability of fair value estimates of investment properties because of the limitations of appraisals, the diversity of applied approaches in appraising investment properties and the reliability problem for mark‐to‐model approaches usually applied in determining the fair value of investment properties.Originality/valueThis parameter has not been considered before in previous literature.

The Significance and Performance of Listed Property Companies in Asian Developed and Emerging Markets

Whilst property has become a major global investment class beside shares and bonds, listed property companies also take a higher exposure in the Asian stock markets compared to the other continents. This reflects an increasingly significant role of Asian property securities in the regional and global context. This study presents a profile and performance analysis of the listed property companies for 13 Asian countries according to the level of market maturity as the developed, emerging and lesser emerging tiers over Jan. 1999 – Dec. 2009. This covers the developed market tier (Japan, Hong Kong, Singapore), emerging market tier (Malaysia, Korea, Taiwan, Thailand) and the lesser emerging market tier (China, India, Indonesia, Philippines, Sri Lanka and Vietnam). The research shows the tier of the lesser emerging markets in Asia have the potential to provide enhanced property investment returns.

The Significance and Performance of Listed Property Companies in the Philippines

Located in a highly dynamic region, the Philippines have been emerging as an unexplored property market, with a competitive advantage of a highly skilled labor force. Although the Philippine property market has drawn increasing attention in the recent years, details about the Philippine property market are still limited. This paper presents a profile of the Philippine property market and assesses the significance and performance of listed property companies on the Philippine Stock Exchange. The risk-adjusted performance analysis and significance of listed property companies in the Philippines is assessed over Jan. 1999 – May 2010, with the ongoing property investment issues highlighted.

Internet business strategies by property companies in Asia

PurposeThe purpose of this paper is to present the results of a study of the top listed property companies in Asia based on capital market value on internet business strategy, and to examine the relationship between top companies and the internet business strategy index.Design/methodology/approachData for the research were collected from the top 30 property companies in Asia through their web sites. The services and information offered in these web sites are discussed and used to describe the growth of internet usage in the real estate business.FindingsFrom the findings, most companies in Asia realised the importance of the internet as a marketing tool. This has been proved from the good average score of the internet business strategy attributes. The results indicated that top property companies in Asia implemented good internet business strategy.Research limitationsThe research is based on a study from the top 30 companies in Asia based on market capital values as at 30 June 2009. Only three countries were selected in this study: Malaysia, Singapore and Hong Kong.Originality/valueThis paper examines the practice of property companies in Asia of using the internet as a marketing tool in property business in order to enhance the marketing strategy in this borderless world. The findings provided some insight and guidelines for the industry as well as academics on the use of information and communication technology in the property business.

The Reliability of Investment Property Fair Values Under IFRS

The valuation of property companies and fair value accounting for investment properties under IFRS are closely affiliated with each other. This is because property companies are commonly valued using net asset value as a valuation technique. The term net asset value represents the fair value of a property company’s assets less its liabilities and therefore can easily be determined, as under IFRS investment property is reported using a fair value approach. This paper examines the perception of fair value estimates for many companies’ main asset: investment properties. For that purpose we investigate the association between the net asset values of European listed property companies and their market prices. We find that net asset value usually departs from the market capitalization of European property companies. We think that those deviations are a result of insufficient accuracy of fair value estimates of investment properties because of the limitations of appraisals, the diversity of applied approaches in appraising investment properties and the reliability problem for mark-to-model approaches usually applied in determining the fair value of investment properties.

Environmental Performance: A Global Perspective on Commercial Real Estate

In this report, we summarize the results of the first global survey on environmental practices in listed property companies and private property funds. The survey is intended to increase industry awareness and provide information on current environmental management practices. Without detailed information on the behavior and environmental performance of the global property sector, investments in property funds and companies cannot be assessed on environmental performance, so a responsible investment strategy cannot be implemented. This report provides the institutional property investment market with a unique dynamic environmental benchmark: based on the survey results, we have developed an “Environmental Real Estate Index”, which includes sub-scores on environmental management practices and on the actual implementation of these practices. By using information contained in the index, institutional investors can compare the environmental score of individual property investments with their environmental real estate targets. This benchmarking can serve as a catalyst for environmental engagement in real estate investments.

The Significance and Performance of Listed Property Companies in Vietnam

Vietnam has emerged as a rapidly growing economy in the last few years, with the average growth rate in excess of 8.0% per year before the global financial crisis and 5.3% in 2009. Although Vietnam is located in a region of significant growth in new property developments, details about the Vietnam property market are still not readily available. This paper presents a profile of the Vietnam property market and assesses the significance and performance of listed property companies on the Ho Chi Minh City Stock Exchange (HSX). The risk-adjusted performance analysis and significance of listed property companies in Vietnam is assessed over August 2003 - August 2009, with the ongoing property investment issues highlighted.

Value‐relevance of presenting changes in fair value of investment properties in the income statement: Evidence from Hong Kong

This study investigates the value‐relevance of the revision introduced in HKAS 40 (2004) ‘Investment Property’ on the presentation of changes in the fair value of investment properties. The revision follows that introduced in IAS 40 (2000) as Hong Kong adopted the International Financial Reporting Standards in 2005. As introduced in IAS 40 (2000), HKAS 40 (2004) requires that companies choosing to adopt the fair value model have to present changes in the fair value of investment properties in the income statement. Previously under the Hong Kong accounting standard SSAP 13 (2000), such changes were presented primarily in the revaluation reserve. Using both a threeday short window centred around the earnings announcement date and a 12‐month long window, this study provides evidence that investors value the HKAS 40 (2004) revision in the presentation of the changes in fair value of investment properties. Based on a sample of listed property companies in Hong Kong during 2004–2006, the results of this study show a significantly higher market price reaction and returns association when changes in fair value of investment properties are presented in the income statement. The results of this study are of interest not only to academic researchers, but to practitioners and standard setters as they assess the decision usefulness of the revised presentation.

The Significance of Sustainability Practices by the Malaysian Property Sector

Sustainability has taken on increased significance in recent years, with ‘green buildings’ becoming increasingly important to tenants, owners and property developers. The purpose of this paper is to assess the implementation of sustainable property practices by property companies in Malaysia. This will be assessed by reviewing the annual reports and websites of the listed property companies in Malaysia to assess a range of sustainability criteria to determine the significance of sustainability practices in their property development activities. Some of Malaysian property companies are seen to be leading the sustainable property agenda, although the overall property company sector in Malaysia has room for improvement to align more fully with international best practice in sustainability.

Are State-Owned Companies Underperforming? A Case Study of Chinese Listed Property Companies

China's privatization program was initiated in April 1984 through the State Commission; however, the State continues to hold dominant shares in privatized companies. The fast growing economy has created a favorable environment for the private economy to develop, especially in property markets that have been booming since 2000. This study uses data of all the listed property companies in China's stock markets from 2000 to 2005 to investigate two issues: (1) who owns China's listed property companies; and (2) the performance differences between these two types of property companies. The goals of the research are to examine whether state-owned companies are less efficient and underperform privately-owned companies in the property sector and what type of property companies are good investments.

Trading Intensity and Real Estate Performance

This paper investigates whether it is possible to create value through the active management of direct property portfolios. Using data from the USA, the UK and Australia, we examine whether trading intensity and portfolio growth explain the risk and return characteristics of listed property companies. The results suggest that beating the market by pursuing tactical asset selection and investment timing strategies is difficult even when acquiring and disposing of properties in illiquid private property markets. When the property type in which the firm specializes is included as a control variable in the regressions, none of the portfolio management intensity indicators developed in this paper is significantly associated with abnormal performance or systematic risk.

How Does the Market for Corporate Control Function for Property Companies?

We investigate 95 takeovers of property companies all over the world and find that only two of those are hostile. To determine the effectiveness of the market for corporate control, we first study characteristics of targets and acquirers compared to a control sample, using the complete global universe of listed property companies during the most recent takeover wave (1999–2004). We find that the inefficient management hypothesis holds for both REITs and non-REITs, as targets exhibit significant underperformance before takeovers. In the second part of this study, we investigate shareholder wealth effects following takeovers and confirm previous findings that abnormal returns for targets and bidders are distinctly different for the real estate sector. Moreover, we show that this difference not only holds for REIT-to-REIT mergers, but also for mergers of real estate firms without a REIT-status.

Ownership structure and corporate performance: empirical evidence of China’s listed property companies

This paper investigates the relationship of ownership structure and corporate performance of China’s listed property companies. Data from all the listed property companies on China’s stock market from 2000 to 2002 were used to study ownership concentration, type of controlling shares and their relation to corporate performance. The methodology applied is the conventional ordinary least square (OLS) model which is widely used in empirical studies on corporate governance. The study shows that ownership concentration has a positive association with corporate performance. Also that state shareholding is positively related to corporate performance; this is inconsistent with other empirical studies on the ownership structure and corporate performance of China’s listed companies and rflects the industry’s characteristics.

Investor Sentiment and Noise Traders: Discount to Net Asset Value in Listed Property Companies in the U.K.

There are parallels between the operation of closed-end funds and in the United Kingdom property companies. In both types of corporations, the market capitalization is commonly less than the net asset value (NAV) of the assets owned by the firms. This article investigates the relationship between the NAV of U.K. property companies and their market capitalizations. We first examine the hypothesis that discounts are the result of agency costs, contingent capital gains tax liability and a number of other firm specific factors. We then examine the hypothesis that discounts result from the interaction of noise traders and rational investors. The evidence suggests that both hypotheses have utility in explaining property company discounts.