REIT Performance and Lines of Credit

Posted: 22 Jun 2011

See all articles by David M. Harrison

David M. Harrison

UCF; Texas Tech University

Kimberly F. Luchtenberg

American University - Department of Finance and Real Estate

Michael Seiler

College of William and Mary - Finance

Date Written: June 20, 2011

Abstract

Using a sample of equity REITs traded on major U.S. exchanges between 1990 and 2009, we investigate the relationship between REIT line of credit usage and subsequent firm profitability. Our results, which are robust across multiple accounting measures of firm operating performance, indicate enhanced liquidity is strongly associated with better firm performance. Furthermore, the benefits of enhanced liquidity appear to be strongest for those firms identified as being capital constrained. These results also provide insight into, and a rational economic justification for, the previously documented positive borrower wealth effects associated with bank loan announcements.

Keywords: Lines of Credit, REIT, Operating Performance, FFO

Suggested Citation

Harrison, David M. and Luchtenberg, Kimberly F. and Seiler, Michael, REIT Performance and Lines of Credit (June 20, 2011). Journal of Real Estate Portfolio Management, Vol. 17, No. 1, 2011. Available at SSRN: https://ssrn.com/abstract=1868598

David M. Harrison

UCF ( email )

Orlando, FL 32816-1400
United States
407-823-1127 (Phone)

Texas Tech University ( email )

2500 Broadway
Lubbock, TX 79409
United States

Kimberly F. Luchtenberg

American University - Department of Finance and Real Estate ( email )

Kogod School of Business
4400 Massachusetts Ave., N.W.
Washington, DC 20016-8044
United States

Michael Seiler (Contact Author)

College of William and Mary - Finance ( email )

VA
United States

HOME PAGE: http://mason.wm.edu/faculty/directory/seiler_m.php

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