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Financial Resilience:
Alamoudi, Maryam
Alamoudi, Maryam
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Abstract
This study examines the financial resilience of publicly listed real estate companies and Real
Estate Investment Trusts (REITs) in Saudi Arabia during the COVID-19 pandemic. Employing
panel data quantitative analysis, a sample of 24 companies, comprising 12 real estate
companies and 12 REITs, over a five-year period (2019–2023), the research analyzes the
impact of financial and macroeconomic variables on company performance, measured by
Return on Equity (ROE). Key independent variables include debt-to-equity ratio, Company
Size, current ratio, cash flows, and macroeconomic factors such as repo rate, COVID-19 case
trends, and a pandemic dummy variable.
The results reveal a significant negative relationship between debt-to-equity ratio and ROE,
emphasizing the importance of conservative debt management for financial performance.
Company Size and liquidity also exhibit mixed effects, with inefficient use of liquidity
contributing to diminished returns. REITs demonstrate greater financial stability compared to
traditional real estate companies, suggesting their superior ability to manage economic shocks.
The findings further highlight the moderating role of interest rates in mitigating the financial
strain on highly leveraged companies during periods of economic uncertainty.
Policy implications include encouraging conservative debt policies, enhancing liquidity
management practices, and promoting REITs through favorable regulatory frameworks.
Additionally, flexible monetary policies, improved macroeconomic risk management, and
enhanced financial literacy for industry stakeholders are recommended to bolster resilience in
the real estate sector. These measures aim to guide companies in utilizing and optimizing their
capital structures and improving their adaptability to future economic disruptions.