On the Capital Structure of Real Estate Firms
The University of Sydney Business School
University of Cambridge - Department of Land Economy
Kelvin Jui Keng Tan
University of Queensland - Business School; Financial Research Network (FIRN)
August 24, 2010
23rd Australasian Finance and Banking Conference 2010 Paper
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.
Number of Pages in PDF File: 32
Keywords: Capital Structure, Leverage, Maturity, Real Estate Firms
Date posted: August 23, 2010 ; Last revised: April 5, 2011
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