Spanish reits as an investment vehicle and financing source of the real state activity

Abstract

Purpose: Analysis from a financial perspective of the SOCIMI, real estate investment vehicles regulated in Spain since 2009, which are equivalent to Real Estate Investment Trusts (REITs).

Design/methodology: It has been used the inductive-deductive and experimental methodology.

Findings: From the investors point of view, SOCIMI are real estate investment vehicles competitive in terms of profitability and risk being affected not only by the evolution of financial markets, but also by its underlying assets which are subject to the real estate market cycle. On the other hand, SOCIMI are helpful for funding capture in real estate companies but it is foreseen that its quotation will incorporate significant discounts over the Net Asset Value (NAV) of its underlying assets. For investors as well as for real estate company managers, the application of behavioral finance will enable a better investment and financing decision making in the real estate market with the contribution of analysis models which make possible the understanding of market inefficiencies.

Originality/value: Further investigation over SOCIMI, the real estate investment vehicle, barely studied up to now, can help to improve decision making of investors as well as real estate companies interested in fund raising through this vehicle.