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The REIT Modernization Act of 1999

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Abstract

This article examines two effects of the passage of the REIT Modernization Act (RMA) of 1999: its impacts on REIT shareholder wealth and changes in REIT systematic risk in the period following its passage. The results indicate a modest positive wealth effect associated with the legislative events leading to its enactment. Our estimates of the wealth gain probably underestimate the true wealth gain because of the partially anticipated nature of the legislative process. We also document a significant decline in the systematic risk of REITs subsequent to the passage of the RMA. The evidence suggests that this decline is not attributable to a provision of the RMA that allows REITs to establish taxable subsidiaries.

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Authors and Affiliations

  1. Department of Finance, College of Business, University of Missouri-Columbia, 424 Cornell Hall, Columbia, MO, 65211-2600, USA

    John S. Howe

  2. Department of Finance, College of Business, University of Missouri-Columbia, Columbia, MO, 65211-2600, USA

    Ravi Jain

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  1. John S. Howe
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  2. Ravi Jain
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Correspondence to John S. Howe.

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Howe, J.S., Jain, R. The REIT Modernization Act of 1999. The Journal of Real Estate Finance and Economics 28, 369–388 (2004). https://doi.org/10.1023/B:REAL.0000018788.67059.4a

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  • DOI: https://doi.org/10.1023/B:REAL.0000018788.67059.4a

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