RETurning to REITs

We analyze the valuation and return performance of real estate trusts (RETs), the 19th-century predecessors of REITs. In contrast to REITs, RETs were not required to adhere to any statutory REIT regulations. Similar to modern-day REITs, we find that dividend growth rather than discount rates drive RET valuations. We also show that performance behavior of RETs is similar to REITs especially with respect to financial crises, the Great Depression versus the Great Recession. This raises the issue of whether regulators should revisit some statutory REIT requirements which limit how REITs are allowed to grow