Working Paper #423
The Five Overlooked Features of the Real Estate Capital Markets
Bernard Winograd
Investing Real Estate Investment Trusts
More than five years ago, in the inaugural issue of the Wharton Real Estate Review, Peter Linneman published “Forces Changing the Real Estate Industry Forever.” How have Linneman’s arguments held up? REITs have not yet gained significant advantages in rais-ing debt or equity capital, as he foretold, but transparency has resulted in lower capital cost. Rational pricing has not brought an avalanche of capital to REITs; capital for devel-opment remains a private sector endeavor. Finally, certain real estate capital sources seem bound to private markets. But Linneman got it absolutely right when he observed that REITs had created a revolution.