Volume 28, Number 3, 2006 of the Journal of Real Estate Research
On the Quality of
FFO Forecasts
David H. Downs
School of Business,
Virginia
Commonwealth University
P.O. Box 844000,
Richmond VA 23284-4000
E-mail: dhdowns@vcu.edu
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Z. Nuray Güner
Middle East Technical University
Ankara, Turkey |
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Abstract: This paper is
the first attempt to provide an objective assessment of the quality of
real estate funds from operations (FFO) forecasts. Our work, which looks
past the more primitive question concerning the appropriate measure for
real estate earnings, quantifies and tests the quality of REIT FFO
forecasts relative to the net income forecasts of several comparison
groups. Our results show the high quality of REIT forecasts are
remarkably robust and are not driven by the level of analyst attention.
Investors in a post-Enron and Sarbanes-Oxley era may find the
implications for high quality forecasts of real estate earning to be an
appealing investment concept.
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