REIT and Reoc Systematic Risk Sensitivity

Real Estate Investment Trusts (REITs) and Real Estate Operating Companies (REOCs) seem to have different systematic risk levels even though both invest almost exclusively in real estate-related assets. The findings indicate that business risk is negatively related to systematic risk, as measured by beta, for REITs, while betas are positively related to agency costs for REOCs. The two groups' betas also show differing sensitivity toreal estate property type and regional location. REITs' systematic risk is also sensitive to financial leverage and financing form