Property Type Focus For Public Equity Reits Performance Finance Essay - Free Essay Example

Sample details Pages: 8 Words: 2280 Downloads: 8 Date added: 2017/06/26 Category Finance Essay Type Analytical essay Did you like this example? Real Estate Investment Trusts (REITs) allow all investors, as opposed to only the most affluent ones to invest in real estate. Apart from this, shares in REITs are more liquid than actual property. Finally, double taxation is avoided, because REITs are exempt from corporate taxes if they distribute 90% of their taxable income in form of dividends  [1]  (among other conditions). Don’t waste time! Our writers will create an original "Property Type Focus For Public Equity Reits Performance Finance Essay" essay for you Create order The rapid expansion of equity REITs started in early 1990s and peaked in 2006 with about $400bn market capitalisation.  [2] Given the apparent popularity, it is increasingly important to better understand this asset class. The aim of this paper is to find whether there are any differences in performance across REITs with different property-type focus. If there are no differences, investors would be wasting resources by analysing each REIT type separately. However, if the reverse is true, excess returns could be earned by increasing the share of a particular type in the portfolio. It would also be interesting, because it would violate the efficient market hypothesis. This study contributes to the existing discussion by investigating whether differences between property types emerged (or got amplified) in the recent market collapse. There is a number or reasons why this could be the case. For example, decrease of home-ownership rate resulting from the mortgage-crisis could have in duced people to move to the rental sector. For residential REITs this would provide a cushion in form of an influx of extra demand for rented accommodation. As it can be seen from Figures 2 and 3, homeownership in the US fell below 67% in 2011 from almost 69% before the crisis. Rental vacancy rates increased during the crisis but this increase was not unprecedented. Possibly, if it was not for the ex-home-owners, the recent increase could have been more dramatic. Figure 2  [3] This effect is likely to be much lower for commercial real estate, as firms often prefer to rent rather than own their premises even in the favourable economic conditions, as this prevents tying up substantial amounts of capital  [4]  . As a result, when the crisis starts, they already were renters. As it can be seen from Figure 4, vacancies in the office sector almost doubled between 2007 and 2009 and net absorption was negative for two years. Also, it is often commercial real estate is more correlated with the unemployment rate and more vulnerable to shocks to the economy. By having a weaker link to the unemployment and GDP, residential REITs could have suffered less. Figure 4  [5] Industrial real estate faces also extra risk due to lack of tenant diversification. Warehouses and industrial premises tend to be large and typically occupied by a small number of tenants. Industrial REITs could have suffered from this problem in a downturn. Another major category is healthcare REITs. With increasingly aging population this seems to be an attractive investment. Nevertheless, any effect seen in the total returns data could be simply due to the 2010 healthcare reform, which implies that more people will be covered by the insurance in the US and therefore investors could expect more demand for healthcare property. On the other hand, healthcare REITs even before the reform had one of the lowest debt/capitalisation ratios (28.8% in 2009 compared to the average of 44.76% for all REITs) and offered relatively high returns.  [6]  More leveraged sectors could have found themselves is more trouble when the crisis started. Some researchers find that the type of REIT indeed determines the returns to investor. For example, Gyourko and Nelling (1996) regress betas on the percentage of properties of each type and find that retail REITs had significantly higher market sensitivity than industrial and warehouse REITs in the period of 1988-1992. Kim et al (2002) use Jensen index and perform ANOVA and find that hotel REITs underperformed other types. Redman and Manakyan (1995) regress Sharpe ratios of REITs on their characteristics. They find that property type focus together with geographical location and financial parameters are significant determinants of REITs risk adjusted returns. Finally, Benefield, Anderson, Zupano (2009) calculate Treynor measure and Jensen alphas and test their significance using both parametric and non-parametric tests. They find that REITs with diversified portfolio of properties (with respect to property type) perform better when the market conditions are good. In the downturn, there is however little evidence of superiori ty of diversified REITs. However, other strands of research suggest that property type does not matter for the return. For example, Young (2000) finds that randomly chosen portfolios that do not take property type into account perform in the same way as property-type specific portfolios. This analysis was applied to 1989-98 data. Chiang et al (n. d.) use three models CAPM, Fama-French and Cahart and apply it to data in the period of 1994-2005 and they conclude that there is no statistically significant differential in the risk adjusted performance of various types of REITs. DATA Data on monthly returns on 130 US public equity REITs was obtained from SNL Financial. SNL REIT indices were used to group REITs into types. Details of what exact companies each type includes are available in Appendix 1. The returns include both: capital gains and the dividends. The types of REITs considered are the following: healthcare, hotels, industrial, diversified/other, office, retail, residential and self-storage. SNL US Equity REIT is an index that includes all publicly traded REITs. Measure of market portfolio used in this study is SP 500. Monthly total returns on this index also come from the SNL Financial. Risk free rate and Fama-French factors were obtained from Kenneth R. Frenchs  [7]  website. The factors are difference in returns on big and small stocks (SMB) and difference in returns on stocks with high and low book-to-value ratio (HML). Data covers April 2003 January 2011 The frequency of the data is monthly, to clean the noise that can be found in the dai ly data. Also, this frequency is mostly used in the literature, so the study will be more comparable to others. Finally, yearly data would produce only few observations, which could raise concerns that the results are not reliable. In terms of the reliability of data, SNL Financial seems to be a relatively safe source, widely used by numerous investment banks. The only problem with the SNL is that it does not cover the pre-2000 period. No comparison with the previous periods can be therefore made. The last issue is that of division of data into PRE-CRISIS and CRISIS periods. 30 April 2007 was chosen as the division-point. The decision was based on the fact that most REITs started to offer negative returns at this time. Finally, it could be claimed that CRISIS covers the recovery time (when the recession ended). This is simply a nomenclature issue and inclusion of the recovery time is the intention of the author, as it is assumed that the crisis could have some long-lasting eff ects on the ability of certain REIT types to outperform others. Descriptive statistics for the period of April 2003 April 2007 (referred to as PRE-CRISIS from now on), period of May 2007 January 2011 (referred to as CRISIS) are presented in Tables 1-2. The mean return for most REITs was higher than that of SP 500. However SP 500 also carried lower risk. Among REIT types, self-storage had the highest mean return of almost 2.48% per month, but the standard deviation of those returns was also relatively large. Healthcare REITs offered large returns as well. The lowest mean return was on residential type 2.06% per month. What strikes here is that the means do not seem to differ dramatically across types. Simple comparison of returns is not an appropriate method of investigating the problem. Higher return could be just a reward for a higher risk. There are three most popular risk-adjusted measures of performance: Sharpe ratio, Treynor ratio and Jensen alpha. They all benefit from having an intuitive interpretation. Sharpe and Treynor ratios are similar they are simply excess return divided by risk. Risk in the Sharpe ratio is the total risk, while Treynor ratio only takes into account market risk. Jensen alpha, on the other hand, informs of the extra return that cannot be explained by the market excess returns. In the downturn, Sharpe and Treynor ratio can be negative, which makes results difficult to interpret. Furthermore, Sharpe ratio does not control for size or any other characteristics. Jensen alpha is much more flexible in that respect, because different models can be used to estimate it. For example, Fama-French three factor model, which controls for size and book to equity values. The shortcoming of both Sharpe ratio and Jensen alpha is that they assume well diversified portfolios. However, Jensen alpha seems an attractive measure, because, as mentioned in Kim et al (2002), unlike other measures it can be tested for statistical significance. F inally, Jensen alpha is the most popular measure in the literature. Taking all the above into consideration, it seems most reasonable to rely on the Jensen alphas. However, the Sharpe ratios were also calculated to see whether they offer similar results. First, Sharpe ratios were computed for all types of REITs and for both periods, using the following formula (based on Sharpe (1964)): The higher the ratio, the better the performance, because a higher return was achieved at a lower risk. The main performance measure is Jensen alpha (Jensen (1968)). Positive (negative) Jensen alpha indicates a superior (inferior) performance relative to the market. Jensen alphas were obtained for each REIT type from two different models: standard CAPM and Fama-French. The latter is preferred, as it was found that it captures the nature of REITs more accurately (for example: Chiang et al (n. d.)). The constant term from each model is the Jensen alpha. The above discussed models are as follows : a) Standard CAPM: The notation is the same as before and is the return on market portfolio at time t b) Fama-French model: Differences in Jensen alphas need to be then tested for statistical significance. First single-factor ANOVA was calculated. After this, non-parametric Moods Median was used to check for robustness (following Benefield et al 2009). The method comes from Brown and Mood (1948). First, Jensen alphas were calculated for each REIT individually and these alphas then entered the ANOVA and Moods tests. Moods test consists in simply calculating how many stocks within each type have a higher or lower/equal Jensen alpha than the overall median of the REIT market. Then a simple ÃÆ' Ãƒ ¢Ã¢â€š ¬Ã‚ ¡2 test with observed and expected values is calculated to test the null hypothesis that medians of Jensen alphas are the same across REIT types. RESULTS Results of the point estimates of Sharpe ratios (using type-portfolios) are presented in Table 3. Sharpe ratios fell dramatically for all REIT types in the CRISIS period, which was expected. Second, rankings for the two periods differ. For example, hotel REITs appear to be the best performing in the PRE-CRISIS period, but they are only 5th during the CRISIS. Nevertheless, no conclusion can be drawn, because no information is available about the statistical significance of these results. Before the crisis all alphas were positive, which indicates superior performance of REITs compared to the market. However only hotel and retail REITs have (marginally) significant alphas and that significance only persists for hotel REITs when Fama-French model is used instead of the CAPM. After/during the crisis all alphas (except the one for industrial REITs) were positive but insignificant at any conventional level. Furthermore, betas are higher for the CRISIS period, regardless of which model is used. In addition, results are similar to Sharpe ratios. The differences between point estimates across types need to be tested for statistical significance. Jensen alpha for each individual REIT were calculated. Then ANOVA and Moods Median test were carried out. In case of ANOVA, the null hypothesis is that mean excess returns are equal across types. In case of Moods test, the null hypothesis is that median excess returns are equal across types. Both tests give similar results the hypothesis that there are no differences in performance across REIT types cannot be rejected for the PRE-CRISIS period at the conventional 5% level. However for the CRISIS period, both tests suggest that the null hypothesis of no differences in performance across types can be rejected at the 5% level. The above is true regardless of whether CAPM or Fama-French model is used. For the analysis to be complete, it is reasonable to check which REIT types are different. Moods Median Test for each pai r of REIT types in the CRISIS period was performed. The null hypothesis in each case is that there is no difference in median Jensen alphas (from the Fama-French model). The results can be found in Table 9. This study investigates whether there are any differences in the performance of different property-types of REITs. The contribution of this paper is to analyse the question in the light of the recent crisis and compare the results to the ones obtained for the preceding period. Two measures of performance were used: Sharpe ratio and Jensen alpha. In order to test the significance of the differences across types, ANOVA and Moods Median Test methodologies were used. In addition, Jensen alpha was obtained from two models CAPM and Fama-French. Sharpe ratios seem to indicate different rankings of different types of REITs before and during/after the crisis. Jensen alphas are mostly positive in both periods, but many of them are insignificant. The results suggest no differences in pe rformance across property-types of REITs before the crisis. However during and after the crisis, healthcare and residential REITs outperform other types. Future research could focus on understanding the exact causes of these results. For example it could be resolved whether low levels of debt or the healthcare reform were the causes of healthcare REITs performance. Moreover, types could be broken down into subtypes to better understand the nature of the problem.

Susan Glaspell s A Jury Of Her Peers - 878 Words

Throughout history, there has been a blatant difference in the world’s perception of the hierarchical standings of men and women. In many regards, men are viewed as superior to women. Because progress towards equality between the sexes has been made, it may be difficult for one to imagine the stark differences in the standards of which men and women were held to a century ago. In â€Å"A Jury of Her Peers,† Susan Glaspell crafts an intricate portrayal of these differences, but also provides a closer look at interpersonal relationships in the late 19th and early 20th centuries, as well as how one’s atmosphere may affect the mind. Glaspell’s commentary is clear regarding the standing of men and women of the time, with the male characters being in positions of duty and respect, and the female characters being in positions of maintenance. These choices made by Glaspell allow the reader to observe the subtle differences in the sexes’ responsibilities and what they view as important details. This difference results in the male characters of the story believing their opinions hold more weight than those of the female characters. It is understood that the men view the women’s opinions as frivolous when upon observing the kitchen of Minnie Wright, the Sheriff makes the statement, â€Å"Nothing here but kitchen things,† (Glaspell 784). The reader knows the â€Å"kitchen things† eventually tell the tale of the murder of John Wright, but the men are not willing or able to look as closely as Mrs.Show MoreRelatedSusan Glaspell s A Jury Of Her Peers1408 Words   |  6 PagesGrowing up i n Iowa in the 1800s and 1900s, Susan Glaspell took inspiration for many of her stories from personal experiences. As a former courthouse reporter herself, Glaspell’s short story â€Å"A Jury of Her Peers† is based largely on her involvement with a murder case and a kitchen she recalled investigating. â€Å"A Jury of Her Peers,† a rendition of her early play, Trifles, focuses on the homicide of an abusive husband by his wife. While the men investigating the case overlook the various signs of abuseRead MoreSusan Glaspell s A Jury Of Her Peers1174 Words   |  5 Pages A Jury of Her Peers is a short story written by Susan Glaspell in 1917 and follows the investigation of the murder of John Wright, with his wife Minnie Wright being the alleged murderer. Martha and Lewis Hale assist Sheriff Peters and his wife, Mrs. Peters, with investigating the scene of the crime. Throughout the story, women notice significance in their findings, of which the men overlook. The me n have a dismissive attitude towards the women, ignoring their contributions. When the women solveRead MoreSusan Glaspell s A Jury Of Her Peers995 Words   |  4 Pagesprominent theme in the 1900’s, during a time when women were often treated as second class citizens to men. Susan Glaspell wrote the play â€Å"Trifles,† in 1916, which portrayed how women’s lives were seen as less significant throughout American society. The following year, Glaspell wrote the short story â€Å"A Jury of Her Peers,† which was essentially a longer and more detailed version of â€Å"Trifles.† The stories are alike in many societal implications, since â€Å"A Jury of Her Peers† was based off of â€Å"TriflesRead MoreSusan Glaspell s A Jury Of Her Peers Essay982 Words   |  4 Pagesâ€Å"A Jury of Her Peers† by Susan Glaspell is now known as a feminist classic. Susan Glaspell first published the play â€Å"Trifles† in 1916 and was adapted to the short story â€Å"A Jury of Her Peers† in 1917. The story was rediscovered in the early 1970s, since then it has been reprinted into textbooks and anthologies. It is said that while Glaspell was working as a reporter she was inspired to write â€Å"Trifles† and â€Å"A Jury of Her Peers.† The stories are inspired by a real murder case she was covering. TheRead MoreSusan Glaspell s A Jury Of Her Peers999 Words   |  4 PagesFrom beginning to end, Susan Glaspell’s 1917 short story â€Å"A Jury of Her Peers,† has several repetitive patterns and symbols that help the reader gain a profound understanding of how hard life is for women at the turn-of-the-century, as well as the bonds women share. In the story two women go with their husbands and county attorney to a remote house where Mr. Wright has been killed in his bed with a rope and he suspect is Minnie, his wife. Early in the story, Mrs. Hale sympathizes with Minnie andRead MoreSusan Glaspell s Ju ry Of Her Peers1841 Words   |  8 PagesName: ZaZa Horton Professor: Leblanc Course: Anicent Woman in Greece 20 April 2015 Susan Glaspell’s â€Å"Jury of Her Peers† â€Å"Jury of Her Peers† is a short story that revolves around the strange death of john wright. It is a piece of work that exposes sexism on women. Women have been categorized for some time now based on their gender and not on ability and skills. They have always fell at the short end of the stick when compare against men. Nevertheless, there were many similarities as well asRead MoreSusan Glaspell s A Jury Of Her Peers Essay1164 Words   |  5 PagesSusan Glaspell was a prolific author, playwright, journalist and novelist in the early 1900s. Early in her career as a reporter she wrote many articles including the newspaper coverage of a murder trial known as the Hossack Case when she worked for The Des Moines Daily News in Des Moines, Iowa. This murder trial was a much publicized event in which a woman, Margaret Hossack, was accused of murdering her prosperous husband on the couple’s farm in Des Moines. In t hese newspaper articles dated fromRead MoreSusan Glaspell s A Jury Of Her Peers Essay1789 Words   |  8 Pagesdefined as the treatment of someone or something with due fairness, but the fairness of a situation is often seen differently, depending upon the viewer. In Susan Glaspell’s, A Jury of Her Peers, the idea of who is capable to fairly judge a person, and therefore serve justice, is examined through the arrest of Mrs. Minnie Wright for the murder of her husband. As the sheriff and others go to the Wrights’ house, the suggestion is made that those empowered by law to cast judgement and those with an understandingRead MoreSusan Glaspell s `` The Yellow Wallpaper `` And A Jury Of Her Peers ``2004 Words   |  9 Pagesof mankind. Women, in particular, fight for fairness even in today’s society. 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Mustazza’s article may help aid readers to understand the differences between Glaspell’s two works and provide understanding as to why Glaspell may have changed the genre and form of the plot. â€Å"Trifles† is a dramatic play whereas â€Å"A Jury of Her P eers† is prose

E-Business for Online Business and Information - myassignmenthelp

Question: Discuss about theE-Business for Online Business and Information. Answer: Online retail Amazon Amazon is an e-commerce company. Its headquarters is in Seattle, Washington. Amazon Company was founded in 1994 and is now 23years old. Due to Amazons advance in technology, it rates as the largest online retailer in the world by their total sales and capitalization of its market. The organization operates in the online shopping industry and offers its services worldwide (Laudon and Trever, 2013, pp. 22). The online company deals in Amazon Appstore, Echo, Kindle, web services, and Comixology as its products. Amazon's official website is Amazon. Com. However, it has a separate retail site for countries based at such as Australia with its website as Amazon.au. Amazon offers product shipping to other nations. Currently, Amazon has made plans to purchase a whole foods market by the end of the year. This purchase will be a great challenge to physical stores. Amazon owns over forty subsidiaries. Some of the product lines available at Amazon include consumer electronics, beauty products, groceries, health and personal care items, apparel, and baby products. Amazon gives its users a platform to write their reviews and rate the products on a scale of one to five on the page of each product. Users buying books can use the Amazon's search inside the book feature that allows a search for keywords. Goh, NG, Wong, and Chong, (2017) argues that efficiency of the online delivery services has been greatly influenced by the revolution of technology and now customers can order for deliveries directly from their phones. Customers preferences have also changed as most shopping is now done online with fewer efforts and less cost needed. The article is relevant to this assignment because bricks and mortar are facing competition from the growing online retail and extinction of physical stores feared by Marc Andreessen, founder of Netscape ((Goh, NG, Wong, and Chong, 2017, pp.4). The competition posed by more customers now moving toward online shopping on sites such as Amazon According to Shay (2017) the physical stores offer an experience that is different from online stores. One can familiarize with smells such as the bread bakery section in a mall and have face to face interactions with other buyers (Shay, 2017, pp.3). Shays article is relevant to this assignment since online retails also offer technological experience to their customers. The users can view other peoples review on the page products are listed and search for goods by viewing their photos online. Ways to which Amazon can improve Firstly, Amazon should ensure the items listed are of high quality. The company has continually been facing accusations of selling counterfeit items to its buyers from its websites (Sahney, 2015, pp.131). Secondly, Amazon should establish a partnership with more than just one social networking sites to give its link to a wider base of users and make access to its website easier and more convenient for browsers who will just have to click on the provided link. Bibliography Goh, S., NG, S., Wong, S., Chong, L. 2017. Outsourcing to online food delivery services: perspective of FB Business Owners. Journal of internet banking and commerce. Laudon, K.C. and Traver, C.G., 2013. E-commerce. Pearson. Sahney, S., 2015. Critical success factors in online retailan application of quality function deployment and interpretive structural modeling. International Journal of Business and Information, 3(1). Shay, C. 2017. 5 Questions with founder of Boulders Sweet Ruckus. Journal of online business and information

The differences between going to university and working after high school graduation free essay sample

Going to university or working after high school graduation After graduating from high school, students have to decide whether to go for higher education in university or start working immediately. This decision will mark an important milestone in their life due to the distinctions between these two options. There are several differences that worth considering. Firstly, knowledge can be seen as an obvious one. Students only learn fundamental knowledge during high school while they can acquire further understanding in their own interested major in university. What they get from high school may not relate to their job; by contrast, in university they are trained to work in particular fields such as science, law, economics, etc. In addition, exposing early to the real working world helps them gain more practical experiences compared with university life. Working after high school also differs from studying in university mentioning to financial aspects. Instead of earning a living and becoming independent of parents, students have to pay for tuition fees, living cost for at least 4 years before get a full time job and live on their own. We will write a custom essay sample on The differences between going to university and working after high school graduation or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page In terms of future career, low education level means difficulties in salary and employment. On the other hand, having a bachelor’s degree will ensure a well-paid job and the chance of gaining promotion in the future. In conclusion, going to university or working after high school graduation will drive students’ life into two separate ways in regard to knowledge and financial aspects. It is very important for each individual to ponder before choosing the most suitable path to success in the future.