SciELO - Scientific Electronic Library Online

vol.22 issue1An investigation into the output tax consequences of bitcoin transactions for a South African value-added tax vendorUse of social media in Free State tourism small, medium and micro enterprises to widen business networks for competitiveness author indexsubject indexarticles search
Home Pagealphabetic serial listing  

Services on Demand



Related links

  • On index processCited by Google
  • On index processSimilars in Google


South African Journal of Economic and Management Sciences

On-line version ISSN 2222-3436
Print version ISSN 1015-8812


CARSTENS, Riëtte  and  WESSON, Nicolene. The impact of South African real estate investment trust legislation on firm growth and firm value. S. Afr. j. econ. manag. sci. [online]. 2019, vol.22, n.1, pp.1-8. ISSN 2222-3436.

BACKGROUND: Through the introduction of the South African real estate investment trust (SA REIT) structure, listed property investment firms are required to conform to international REIT standards, thereby making REITs more attractive to investors. Despite the exponential growth of the SA REIT industry over the past decade, SA REIT legislation - effective from 2013 - has imposed regulations with regard to financial leverage and profit retention, which may affect these firms' sustainable growth rate and firm value. AIM: By deconstructing the sustainable growth rate, we investigated the potential impact of SA REIT legislation on growth rate components and considered the impact of each growth component on firm value. SETTING: The introduction of SA REIT legislation provides an opportunity to investigate how regulation has affected REIT growth and value. METHODS: We investigated changes in the respective sustainable growth rate components using a mixed model analysis of variance. Additionally, we employed a panel regression to assess the impact of each component on firm value (proxied by Tobin Q). RESULTS: We found empirical evidence of decreased leverage and profit retention, as well as increased profit margins, in the REIT period, which may be indicative of firms' reaction to regulation. In addition, we found that profit retention had a significant positive impact on firm value, while leverage showed a significant negative effect on firm value post-legislation. CONCLUSION: This study confirmed a significant change in growth components, with higher average profitability and sustainable growth in the REIT period, suggesting that the REIT industry responded positively to the REIT regime introduction.

Keywords : REIT; real estate investment trust; sustainable growth; firm value; South Africa.

        · text in English     · English ( pdf )


Creative Commons License All the contents of this journal, except where otherwise noted, is licensed under a Creative Commons Attribution License