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Real Estate Securitization and the Debt Maturity Structure: Evidence from J-REITs

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  • Mamoru Nagano

    ()
    (Professor, Faculty of Economics, Seikei University)

Abstract

This paper investigates the relationship between real estate asset liquidity and the liability structure of Japanese real estate investment trusts (J-REITs). It employs data on the regionality and usage of real estate assets as new proxies for the liquidation value of these assets, and arrives at the following conclusions. First, J-REITs with high ratios of real estate investment assets in highly liquid regions, that is, regions where the trade frequency per unit area is high, have high debt-to-equity ratios and debts of long-term maturity. Second, J-REITs with high concentration ratios of small real estate assets that are traded as residential properties also have high debt-to-equity ratios and debts of long-term maturity. In addition, the above relationships are enhanced when these REIT shave a concentrated ownership structure. In summary, this paper empirically validates the employment of regional characteristics and usage type of real estate assets as proxies for asset liquidation value, and confirms that these proxies are related to the capital and liability structures of J-REITs. This connection is possibly intensified by the perception of block shareholders as sponsor firms by market participants.

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Bibliographic Info

Article provided by Asian Real Estate Society in its journal International Real Estate Review.

Volume (Year): 16 (2013)
Issue (Month): 3 ()
Pages: 252-273

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Handle: RePEc:ire:issued:v:16:n:03:2013:p:252-273

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Postal: Asia Real Estate Society, 51 Monroe Street, Plaza E-6, Rockville, MD 20850, USA
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Web page: http://www.asres.org/

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Postal: Asian Real Estate Society, 51 Monroe Street, Plaza E-6, Rockville, MD 20850, USA
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Related research

Keywords: Real Estate Investment and Trust; Liability Structure; Capital Structure;

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