Turkish REITs : an overview of the industry and its performance

Abstract

This thesis aims to provide insight into the emerging real estate investment trust (REIT) sector of Turkey, the reasons underlying its creation, its legal and economic evolution and its performance since the commencement of the REIT Sector Index in January 2000. The paper utilizes a combination of quantitative methods and qualitative discussion in order to identify and analyze some of the key issues that define the current situation of the Turkish REIT industry. The paper can be viewed as a composition of two main parts. The first part provides a qualitative discussion of the emergence of REIT, how it is legally structured and how it fits into the broader real estate markets as well as the Turkish capital markets, particularly the stock market The second part expands on the quantification of the REIT industry. This section also includes the application of the Modern Portfolio Theory to examine how REIT stocks individually and as an industry fit into optimal risky portfolios at various risk and return preferences both based on their actual inflation adjusted stock returns and on their net asset value returns.