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Debt Capital Markets As A Funding Source For Listed Property Funds In South Africa

Author

Listed:
  • Colin Murphy

    (Department of Construction Economics, University of Pretoria)

  • Chris Cloete

    (Department of Construction Economic, University of Pretoria)

Abstract

Purpose of paperProperty finance in South Africa has traditionally been a market dominated by bank lend-ing. However in the context of the Basel III Accord creating cost and other regulatory impli-cations for bank lending, as well a maturing listed property market adopting international best practice in the form of REIT legislation, debt capital markets funding is becoming a significant component of REITs? capital structure. The study seeks to determine the merits and impact of this nascent funding source for REITs in South Africa. MethodologyFollowing a review of applicable literature, interviews with senior management of nine listed property funds and other debt capital markets stakeholders were undertaken. Cer-tain advantages and disadvantages of debt capital markets funding, in comparison to other lending sources, were presented as hypotheses to the interviewees. FindingsThe responses show support from a significant majority of the interviewees for four partic-ular advantages and two disadvantages. The study also found support for these ad-vantages and disadvantages to be transient. Value of paperIt is advised that REITs periodically reassess the respective advantages and disadvantages of this funding source for their business.

Suggested Citation

  • Colin Murphy & Chris Cloete, 2019. "Debt Capital Markets As A Funding Source For Listed Property Funds In South Africa," Proceedings of International Academic Conferences 9011564, International Institute of Social and Economic Sciences.
    • Handle: RePEc:sek:iacpro:9011564
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    References listed on IDEAS

    as
    1. Sun Eae Chun & Hoon Kim & Wonhong Ko, 2012. "The Impact of Strengthened Basel III Banking Regulation on Lending Spreads: Comparisons across Countries and Business Models," Working Papers 2012-15, Economic Research Institute, Bank of Korea.
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    More about this item

    Keywords

    REIT; Basel III; debt capital funding;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G19 - Financial Economics - - General Financial Markets - - - Other

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