Investor responses to timberlands structured as real estate investment trusts

Abstract

This project uses event study methodology to analyze equity market responses to four announcements of forest industry firms converting their corporate structures from traditional C-corporations to real estate investment trusts (REIT). These announcements were Plum Creek in 1998, Rayonier in 2003, Potlatch in 2005, and Longview Fiber in 2005. All four announcements were associated with significant abnormal increases in the stock prices of the four firms on the day before, day of, or day after each firm's announced REIT conversion. Results indicate investor preference for holding industrial timberlands within an REIT rather than traditional C-corporation structure. Copyright © 2008 by the Society of American Foresters.