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Research Seminars & Workshops @ IRES

Mr Patrick Lecomte
ESSEC Business School

A Scoring Framework for Corporate Governance of Externally Managed REITs


20 Oct 2010 (Wed)


3.00 pm - 5.30 pm


RMI Executive Seminar Room
21 Heng Mui Keng Terrace, Level 4


As the REIT regime has been expanding globally, corporate governance practices in emerging REIT markets have become a major concern for domestic and international investors alike. Idiosyncrasies stemming from the ownership models applied in Asian economies and the fact Asian REITs are often externally managed "captive entities" make issues pertaining to corporate governance of the listed real estate sector in Asia all the more important. To address these issues, the paper introduces an original framework that can be used to estimate the quality of corporate governance among externally managed Asian REITs. As a pilot study, the framework is applied to define a corporate governance index of REITs listed on the Singapore Stock Exchange (S-REITs). The index called R-Index enables the ranking of S-REITs' corporate governance practices. It is then used to examine the relationship between corporate governance and performance of S-REITs. The empirical tests based on several performance-related metrics provide evidence supporting a positive correlation between corporate governance practices identified in the R-Index and stock performances. However, we find no positive correlation with operating performance proxied by accounting measures. In other words, S-REITs with higher corporate governance tend to register better risk-adjusted returns but do not outperform operationally. To test for market efficiency, the study shows that S-REITs with the best corporate governance practices also have less information asymmetry.

About The Speaker

Patrick Lecomte is an executive director and a research fellow at ESSEC Business School (Singapore Campus). He specializes in real estate finance, and financial innovation applied to commercial real estate. Patrick holds an MPhil in Real Estate Finance from Cambridge University (England), an MBA from Columbia University (USA), and a post graduate degree from the University of Paris-Dauphine (France). He is a member of the Investment Property Forum (London), the American Real Estate Society, the European Real Estate Society and the Asian Public Real Estate Association (APREA)'s Research Advisory Committee. He has been invited as a speaker in numerous industry conferences, e.g. APREA Property Leaders Conference (Singapore, 2010), Real Estate Investment World Asia (Singapore, 2009), Real Estate Derivatives World USA (New York, 2007, 2008), Marcus Evans Property Derivatives Conference (New York, 2008).

For full paper, download here

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