Page 118 - Undergraduate Research Opportunities Program Proceedings 2017-18

School of Business and Management
Department of Finance

An Empirical Study of Real Estate Investment Trusts (REITs): Experience from United States, Hong Kong and Singapore

Supervisor: LI Kai / FINA
Student: LAW Yin Ting Janita / QFIN Course: UROP1000, Summer

To tackle China’s overheated housing market, China is starting the development of Real Estate Investment Trust,
allowing people to invest in the housing market without actually buying properties on this own but investing in a
security serving similar purpose. We would like to observe the pricing behavior of REITs and its relationship with other
factors, by getting the reference in some matured market, ranging from United States, Singapore to Hong Kong. In this
summer, we conducted a fundamental research to analyze the relationship between the returns of REIT and returns of
Market Index first. We attempt to predict the pricing of REIT or whether it is fairly priced in China and the securities can
replicate the execution from other countries.

Supervisor: LI Kai / FINA
Student: LI Houchen / QFIN Course: UROP1100, Summer

This report is a case study about the largest real estate investment trust in Asia – Link Real Estate Investment Trust. Link
REIT is the first REIT which was listed in the Hong Kong Stock Exchange. In less than 13 years of development, Link REIT
now owns properties spanning from Hong Kong to mainland China, with about 9 million square feet of retail space,
around 61,000 car park spaces, and about 3 million square feet of office space. pThis report provides a detailed study
about Link REIT’s portfolio structure, asset allocation, properties valuation, financial performance and competitor
analysis. This report shows the reasons why Link REIT has continuously growing revenues, high occupancy rates and
reversion rates, and how Link REIT manages to outperform its competitors.

Supervisor: LI Kai / FINA
Student: MA Ming Hei / SBM Course: UROP1100, Summer

This report is to construct the fundamental analyze of Yuexiu Reit in the fields of business improvement, rising financing
costs, the acquisition of Wuhan project, and the cash model. With different aspects of analyzes, the core value of Yuexiu
is sharped and summarized in this report. Through the data collected, the fundamentals of Yuexiu reit are analyzed
through the method of CAPM to see if Yuexiu reit is priced as expected. The last two pages are the research collected to
describe the corporate structure of Link and Yuexiu.

Supervisor: LI Kai / FINA
Student: XIAO Yidi / MATH-SFM Course: UROP1100, Summer

The report discusses the possible relationship between current return of REITs in Hong Kong and the mainstream market
indexes of the previous month and build a linear regression model to demonstrate this relationship numerically. R code
was used during the study to collect data and generate the regression model. Among eight proposed variables, Adjusted
Hang Seng Index and Market Yield of Grade A Offices and Retail of the previous month were proved to have a significant
negative relationship with the REITs return of current month. Due to lack of indicator of latest news in the model, the
model performed poorly when predicting periods with breaking news such as the recent trade war.

Supervisor: LI Kai / FINA
Student: ZHANG Xiao / SBM Course: UROP1100, Summer

108