Banking Relationships and Financial Decisions of REITs

32 Pages Posted: 18 Feb 2021 Last revised: 12 Jul 2021

See all articles by Yuanchen Chang

Yuanchen Chang

National Chengchi University - College of Commerce

Yi‐Ting Hsieh

Feng Chia University

Kiat Ying Seah

National University of Singapore (NUS)

Tien Foo Sing

National University of Singapore (NUS) - Department of Real Estate

Date Written: December 31, 2020

Abstract

Banking relationships are key factors influencing financing decisions of real estate investment trusts (REITs) that are mandated to hold highly specific assets. Using a comprehensive data set of loan facilities by REITs across different markets, this paper empirically tests the effect of REIT-bank relationships on credit costs and other non-price credit terms. We find that REITs with past banking relationships enjoy favourable loan terms that include lower loan rates, higher loan amount, and a less stringent collateral requirement. These favorable terms were kept by relationship banks during the Global Financial Crisis from 2007 to 2009.

Keywords: Bank Lending Relationship, REITs, Cross-country

JEL Classification: D82,G30, G20, G21, G24, L14, N20

Suggested Citation

Chang, Yuanchen and Hsieh, Yi‐Ting and Seah, Kiat Ying and Sing, Tien Foo, Banking Relationships and Financial Decisions of REITs (December 31, 2020). Available at SSRN: https://ssrn.com/abstract=3757788 or http://dx.doi.org/10.2139/ssrn.3757788

Yuanchen Chang

National Chengchi University - College of Commerce ( email )

Taiwan
886229393091-81102 (Phone)
886229393394 (Fax)

Yi‐Ting Hsieh

Feng Chia University

100 Wenhwa Road
Talchung
Taiwan

Kiat Ying Seah

National University of Singapore (NUS) ( email )

1E Kent Ridge Road
NUHS Tower Block Level 7
Singapore, 119228
Singapore

Tien Foo Sing (Contact Author)

National University of Singapore (NUS) - Department of Real Estate ( email )

4 Architecture Drive
Singapore 117566
Singapore

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