Financing Choice and Liability Structure of Real Estate Investment Trusts
AbstractWe conduct an analysis of public financial offerings of equity Real Estate Investment Trusts (REITs), with a focus on liability structure effects and whether or not firms target longer-run debt ratios. Our major findings are that (1) proceeds from equity offers are more likely to fund investment, whereas public debt offer proceeds are typically used to reconfigure the liability structure of the firm; (2) public debt issuers are often capital constrained and target total leverage ratios to retain an investment grade credit rating; and (3) the preoffer liability structure affects the issuance choice decision, in that firms with higher preoffer levels of secured (unsecured) debt tend to issue equity (public debt). Other notable findings are that the market for public REIT debt is integrated with the broader debt markets and that higher credit quality firms issue longer-maturing bonds. Copyright 2003 by the American Real Estate and Urban Economics Association
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Bibliographic InfoArticle provided by American Real Estate and Urban Economics Association in its journal Real Estate Economics.
Volume (Year): 31 (2003)
Issue (Month): 3 (09)
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- Mamoru, Nagano, 2009.
"Real Estate Securitization and the Debt Maturity Structure: Evidence from J-REIT,"
24581, University Library of Munich, Germany, revised Sep 2010.
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- Qiang Li & Hua Sun & Seow Ong, 2006. "REIT Splits and Dividend Changes: Tests of Signaling and Information Substitutability," The Journal of Real Estate Finance and Economics, Springer, vol. 33(2), pages 127-150, September.
- Seow Ong & Joseph Ooi & Yuichiro Kawaguichi, 2011. "Seasoned Equity Issuance by Japan and Singapore REITs," The Journal of Real Estate Finance and Economics, Springer, vol. 43(1), pages 205-220, July.
- Hohenstatt, Ralf & Steininger, Bertram, 2011. "The rat race of capital structure research for REITs and REOCs: Two spotlights on leverage," ZEW Discussion Papers 11-077, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
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