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Financing Patterns and Property Acquisitions of Sponsor-backed REITs: Evidence from J-REIT Markets

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  • Mamoru Nagano

    (Seikei University)

Abstract

By using data on 51 real estate investment trusts (REITs) and 755 real estate deals from 2003¡V2011 in Japan, this study presents evidence that the funding approach decisions of a sponsor-backed REIT differ from those of a REIT without a sponsor. The implications derived from the presented empirical analyses are threefold. First, with regard to the determinants of the choice of the funding approach, under a continuous high stock price trend or a rise in the stock price of a REIT, the probability of choosing stock issuance increases when the REIT and sponsor firm strike real estate deals. Second, the literature asserts that real estate asset liquidity and debt choice are positively related. However, our results suggest that under a high stock price trend, a REIT chooses stock issuance even when it purchases real estate assets that have a high degree of liquidity. Third, debt issuance is chosen when a REIT and its sponsor firm make numerous and large real estate deals when the stock price of the REIT falls.

Suggested Citation

  • Mamoru Nagano, 2016. "Financing Patterns and Property Acquisitions of Sponsor-backed REITs: Evidence from J-REIT Markets," International Real Estate Review, Global Social Science Institute, vol. 19(2), pages 223-248.
    • Handle: RePEc:ire:issued:v:19:n:02:2016:p:223-248
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    References listed on IDEAS

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    Cited by:

    1. Jain, Pawan & Upadhyay, Arun, 2021. "Are REITs more resilient than non-REITs? Evidence from natural experiments," Japan and the World Economy, Elsevier, vol. 58(C).

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    More about this item

    Keywords

    Real Estate Investment Trusts; Stock Price; Stock Issuance; Debt Issuance; Sponsor Firm;
    All these keywords.

    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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