THE WEALTH EFFECTS OF REAL-ESTATE TRANSACTIONS - THE CASE OF REITS

Recent literature analyzing corporate acquisitions and sales of real e state has shown that statistically significant gains accrue to both bu yers and sellers when the transaction is announced. In this paper, we focus solely on the real property transactions of tax-qualified Real E state Investment Trusts (REITs) to determine if REIT shareholders expe rience a similar pattern of positive wealth effects. We find that REIT s do not experience any significant wealth effects from transaction an nouncements. However, we provide evidence that a significant positive wealth effect does occur upon the announcement of a sale transaction w hen the sale is associated with an increase in REIT dividends.