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| Economies of Scale for Real Estate
Investment Trusts Author: Martina Bers and Thomas M. Springer Start Page: 275 Abstract: Using the translog
cost function to estimate economies of scale for a sample of Real Estate Investment Trusts
for the years 1992-1994, we find significant evidence that economies of scale exist for
REITs for all years examined. The results show that measurement of scale economies is
sensitive to the model used for the measurement. Individual characteristics of the REIT,
such as type of management and degree of leverage, affect the magnitude of the scale
economy. Additional variables accounting for property type diversification and geographic
influences have little additional impact on the measured scale economies. Finally, the
measured economies of scale for REITs vary considerably over time. |
