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Perspective on Debt-and-Equity Decomposition for Investors and Issuers of Real Estate Securities



The separation of commercial real estate into structured investment products as suggested by the debt-and-equity model can enhance property value due to positive net changes in agency costs and tax shields. In many cases this enhancement should be large enough to induce real estate owners to make property available for component separation. The resulting income component has the investment characteristics of a tax-sheltered corporate bond, and should be sold to taxable investors to realize the value enhancement.

Suggested Citation

  • Richard A. Graff, 1992. "Perspective on Debt-and-Equity Decomposition for Investors and Issuers of Real Estate Securities," Journal of Real Estate Research, American Real Estate Society, vol. 7(4), pages 449-468.
  • Handle: RePEc:jre:issued:v:7:n:4:1992:p:449-468

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    References listed on IDEAS

    1. George W. Gau & Ko Wang, 1990. "A Further Examination of Appraisal Data and the Potential Bias in Real Estate Return Indexes," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 18(1), pages 40-48.
    2. K. C. Chan & Patric H. Hendershott & Anthony B. Sanders, 1990. "Risk and Return on Real Estate: Evidence from Equity REITs," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 18(4), pages 431-452.
    3. Friend, Irwin & Landskroner, Yoram & Losq, Etienne, 1976. "The Demand for Risky Assets under Uncertain Inflation," Journal of Finance, American Finance Association, vol. 31(5), pages 1287-1297, December.
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    JEL classification:

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


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