IDEAS home Printed from https://ideas.repec.org/a/taf/repmxx/v30y2024i1p36-53.html
   My bibliography  Save this article

Diversification and Cost of Public Debt for REITs: Evidence from the US

Author

Listed:
  • Islam Ibrahim
  • Heidi Falkenbach

Abstract

This paper investigates the impact of property type and geographical diversification on the cost of public debt for U.S. real estate investment trusts (REITs). We measure diversification using the negative of the Herfindahl–Hirschman Index (HHI) and represent the debt cost by the yield spread of the debt issue. We find that property-type diversification has a cost-decreasing effect on public debt. For example, our estimations illustrate that a one standard deviation increase in property type diversification decreases the yield spread by 10.97 basis points on average. In contrast, geographical diversification has a cost-increasing effect. For example, we estimate that a one standard deviation increase in regional diversification increases the yield spread by 9.95 basis points on average. Moreover, we find that controlling for the S&P’s credit rating of the debt issue does not entirely absorb the impact of diversification on the yield spread, suggesting a difference in the credit-risk assessment of diversification’s effects between public lenders and credit rating agencies.

Suggested Citation

  • Islam Ibrahim & Heidi Falkenbach, 2024. "Diversification and Cost of Public Debt for REITs: Evidence from the US," Journal of Real Estate Portfolio Management, Taylor & Francis Journals, vol. 30(1), pages 36-53, January.
    • Handle: RePEc:taf:repmxx:v:30:y:2024:i:1:p:36-53
    DOI: 10.1080/10835547.2023.2233348
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/10835547.2023.2233348
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/10835547.2023.2233348?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:repmxx:v:30:y:2024:i:1:p:36-53. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/repm20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.