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On the Capital Structure of Real Estate Firms

Author
Alcock, Jamie; Steiner, Eva; Tan, Kelvin Jui Keng
Abstract
The leverage and debt maturity choices of real estate companies are interdependent, and are not made separately as is often assumed in the literature. We use three-stage least squares (3SLS) regression analysis to explore this interdependence for a sample of listed U.S. real estate companies and Real Estate Investment Trusts (REITs) traded between 1973 and 2006.We find substantial differences in the nature of the relationship between leverage and maturity for the two firm types. Leverage is a determinant of maturity for non-REITs, whereas maturity is a determinant of leverage for REITs. We also find that the drivers of capital structure choices in real estate companies and REITs clearly reflect the effects of the REIT regulation.
Date Issued
2010-08-24Subject
leverage; debt maturity; capital structure; G32; G01
Rights
Required Publisher Statement: Copyright held by the authors.
Type
article