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Under the Lender’s Looking Glass

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  • Mariya Letdin

    (Florida State University)

Abstract

This paper studies the impact of bank monitoring on the risk of US equity REITs. Using a unique, hand-collected data sample of mortgage balances, I show that bank screening and monitoring of REIT assets via utilizing secured mortgage financing (vs unsecured, public debt) lowers the overall company risk of a REIT. At the asset level, screening results in retail and office assets with higher acquisition values and located in primary markets, i.e., more transparent assets, being pledged as collateral. Further, I find evidence consistent with the role of lender monitoring for secured mortgage loans and show that properties located in closer proximity to a REIT’s headquarters are more likely to be pledged as collateral for a mortgage.

Suggested Citation

  • Mariya Letdin, 2017. "Under the Lender’s Looking Glass," The Journal of Real Estate Finance and Economics, Springer, vol. 55(4), pages 435-456, November.
    • Handle: RePEc:kap:jrefec:v:55:y:2017:i:4:d:10.1007_s11146-016-9561-4
    DOI: 10.1007/s11146-016-9561-4
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