Distribution payout practices and the collapse of A-REITs

Cummins, L; Zochling, HH

Distribution payout practices and the collapse of A-REITs

Cummins, L Zochling, HH

Permalink

Publisher:: PRRES
Publication Type:: Journal Article
Citation:: Pacific Rim Property Research Journal, 2011, 17 (4), pp. 598 - 613
Issue Date:: 2011-01

Open Access

Copyright Clearance Process

Recently Added
In Progress
Open Access

This item is open access.

Adobe PDF

Download full textAdobe PDF (339.79 kB)

View statistics

Full metadata record

Field	Value	Language
dc.contributor.author	Cummins, L	en_US
dc.contributor.author	Zochling, HH	en_US
dc.date.issued	2011-01	en_US
dc.identifier.citation	Pacific Rim Property Research Journal, 2011, 17 (4), pp. 598 - 613	en_US
dc.identifier.uri	http://hdl.handle.net/10453/18749
dc.description.abstract	In the lead up to the Global Financial Crisis, A-REITS pursued aggressive distribution practices. Payout ratios significantly in excess of 100% of underlying earnings became common place, funded largely from increased borrowings. The GFC painfully exposed the unsustainability of this practice. A-REITs were punished when the global debt markets froze and property values crashed, leading to massive equity destruction for over geared A- REITs.This research explores the pre-GFC distributions practices of A- REITs. Annual report financial data analysis and semi-structured interviews with five industry experts were conducted to examine A-REIT distribution practices. The results reveal a clear systematic decline in the relationship between underlying earnings and distributions. It is further discovered that the since abandoned practice of distributing un-realised profits was designed to boost share prices. Paradoxically, it eventually led to their decline and the A-REIT sector's demise.	en_US
dc.publisher	PRRES	en_US
dc.relation.ispartof	Pacific Rim Property Research Journal	en_US
dc.title	Distribution payout practices and the collapse of A-REITs	en_US
dc.type	Journal Article
utslib.citation.volume	4	en_US
utslib.citation.volume	17	en_US
utslib.for	1205 Urban and Regional Planning	en_US
pubs.embargo.period	Not known	en_US
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Design, Architecture and Building
utslib.copyright.status	open_access
pubs.consider-herdc	true	en_US
pubs.issue	4	en_US
pubs.volume	17	en_US

Abstract:

In the lead up to the Global Financial Crisis, A-REITS pursued aggressive distribution practices. Payout ratios significantly in excess of 100% of underlying earnings became common place, funded largely from increased borrowings. The GFC painfully exposed the unsustainability of this practice. A-REITs were punished when the global debt markets froze and property values crashed, leading to massive equity destruction for over geared A- REITs.This research explores the pre-GFC distributions practices of A- REITs. Annual report financial data analysis and semi-structured interviews with five industry experts were conducted to examine A-REIT distribution practices. The results reveal a clear systematic decline in the relationship between underlying earnings and distributions. It is further discovered that the since abandoned practice of distributing un-realised profits was designed to boost share prices. Paradoxically, it eventually led to their decline and the A-REIT sector's demise.

Please use this identifier to cite or link to this item:

http://hdl.handle.net/10453/18749