REIT Debt Pricing and Ownership Structure

The Journal of Real Estate Finance and Economics (2021): 1-44.

60 Pages Posted: 20 Sep 2021

See all articles by Collin Gilstrap

Collin Gilstrap

The University of Toledo

Alex Petkevich

The University of Toledo - Department of Finance

Özcan Sezer

University of Toledo

Pavel Teterin

University of Toledo - College of Business and Innovation

Date Written: October 5, 2020

Abstract

We show that ownership by institutional investors with increased incentives to monitor decreases the cost of both public and private debt in the REIT industry. Our study focuses on four types of “incentivized” investors: long-horizon institutional investors, public pension funds, institutions with significant portfolio allocations to particular REITs (motivated institutional owners), and institutional investors that specialize in REITs. In addition, we confirm our findings using a composite index that incorporates only that part of incentivized ownership that is free from the effects of total institutional ownership. Finally, we provide evidence that some of the empirical relationships that we observe can be attributed to monitoring effects and cannot be entirely explained by the intentional selection of REITs with low agency risk into institutional portfolios.

Keywords: REITs, Cost of Debt, Institutional Ownership, Monitoring

JEL Classification: G11,G12,G14

Suggested Citation

Gilstrap, Collin and Petkevich, Alex and Sezer, Özcan and Teterin, Pavel, REIT Debt Pricing and Ownership Structure (October 5, 2020). The Journal of Real Estate Finance and Economics (2021): 1-44., Available at SSRN: https://ssrn.com/abstract=3924411

Collin Gilstrap (Contact Author)

The University of Toledo ( email )

2801 W Bancroft St
MS103
Toledo, OH 43606
United States

Alex Petkevich

The University of Toledo - Department of Finance ( email )

2801 W. BANCROFT ST.
Mail Stop 103
Toledo, OH Ohio 43606
United States

HOME PAGE: http://homepages.utoledo.edu/apetkev

Özcan Sezer

University of Toledo ( email )

Mail Stop 119, HH 3000
Toledo, OH 43606

Pavel Teterin

University of Toledo - College of Business and Innovation ( email )

2801 W. Bancroft St.
Mail Stop 103
Toledo, OH 43606
United States

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