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Fund Flows and Commercial Real Estate Investment: Evidence from the Commercial Mortgage Market

Author

Listed:
  • Ron Donohue

    (Homer Hoyt Institute)

  • Patric H. Hendershott

    (University of Aberdeen Business School)

Abstract

This paper addresses the issue of the impact of fund flows on real investment. In the classical world, fund flows affect investment by changing the cost of funds or through the weighted average cost of capital. In a less perfect world, fund flows can directly alter investment though a rationing mechanism, where even presumably profitable investment is choked off. This paper examines the commercial mortgage market over the last quarter century. The findings indicate an effect of constrained flows on investment in the early 1990s, but an independent impact of higher flows to the commercial mortgage market in the middle 1980s is not found.

Suggested Citation

  • Ron Donohue & Patric H. Hendershott, 2004. "Fund Flows and Commercial Real Estate Investment: Evidence from the Commercial Mortgage Market," Journal of Real Estate Research, American Real Estate Society, vol. 26(4), pages 417-442.
    • Handle: RePEc:jre:issued:v:26:n:4:2004:p:417-442
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    References listed on IDEAS

    as
    1. David Ling & Andy Naranjo, 2003. "The Dynamics of REIT Capital Flows and Returns," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 31(3), pages 405-434, September.
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    4. Patric H. Hendershott & Edward J. Kane, 1992. "CAUSES AND CONSEQUENCES OF THE 1980s COMMERCIAL CONSTRUCTION BOOM," Journal of Applied Corporate Finance, Morgan Stanley, vol. 5(1), pages 61-70, March.
    5. Luis C. Mejia, 1999. "Availability of Credit and Loan Default: A Look at the Commercial Mortgage Supply Cycle," Journal of Real Estate Research, American Real Estate Society, vol. 18(1), pages 175-196.
    6. William M. Gentry & Christopher J. Mayer, "undated". "What Can We Learn about Investment and Capital Structure with a Better Measure of q?," Zell/Lurie Center Working Papers 403, Wharton School Samuel Zell and Robert Lurie Real Estate Center, University of Pennsylvania.
    7. Hendershott, Patric H & Hu, Sheng Cheng, 1983. "The Allocation of Capital between Residential and Nonresidential Uses: Taxes, Inflation and Capital Market Constraints," Journal of Finance, American Finance Association, vol. 38(3), pages 795-812, June.
    8. S. Michael Giliberto, 1992. "A Note on Commercial Mortgage Flows and Construction," Journal of Real Estate Research, American Real Estate Society, vol. 7(4), pages 485-492.
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    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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