Red Paper – Feb 2017 Investigating the relationship between capital structure and the performance of non-listed real estate funds: focusing specifically on the role of leverage in hedging against inflation

15 Feb, 2017
  • EXECUTIVE SUMMARY

    • A panel data regression analysis was undertaken on a unique, unbalanced panel of APAC non-listed real estate funds to determine the role of leverage in hedging against actual and unexpected inflation with a focus on core funds.

    • There is evidence that APAC non-listed real estate funds provide hedging against inflation and that the use of debt enhances their hedging capabilities.

    • Furthermore, the results show that while leverage enhances a fund’s inflation hedging capability at moderate levels, its benefits are not unrestricted.

    • The results imply that investors can extract information about inflation hedging abilities of non-listed real estate funds from capital structure data, promoting efficient investment decisions.

    • The significance of the results may be influenced by the size of the dataset (119 APAC non-listed real estate funds invested in more than 10 countries across the three styles over the period of 2006-2014).

    Red Paper – Feb 2017 Investigating the relationship between capital structure and the performance of non-listed real estate funds: focusing specifically on the role of leverage in hedging against inflationPDF
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Amelie Delaunay
Senior Director, Research & Professional Standards