An Analysis of REIT Security Issuance Decisions

This article tests the ability of traditional capital structure theories to explain the issuance decisions of real estate investment trusts (REITs). For issuances made between 1997 and 2006, we find strong support for the market timing theory of capital structure. Controlling for past returns and gr...

Full description

Saved in:
Bibliographic Details
Published in:Real estate economics 2010-03, Vol.38 (1), p.91-120
Main Authors: Boudry, Walter I., Kallberg, Jarl G., Liu, Crocker H.
Format: Article
Language:English
Subjects:
Capital structure
Decision making
Equity
Market timing
Rates of return
REITs
Studies
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
cited_by cdi_FETCH-LOGICAL-c5235-220265668224fe41d8be6d405c49cdf13a5bde8d739084a35a0c4bd359772c9c3
cites cdi_FETCH-LOGICAL-c5235-220265668224fe41d8be6d405c49cdf13a5bde8d739084a35a0c4bd359772c9c3
container_end_page 120
container_issue 1
container_start_page 91
container_title Real estate economics
container_volume 38
creator Boudry, Walter I.
Kallberg, Jarl G.
Liu, Crocker H.
description This article tests the ability of traditional capital structure theories to explain the issuance decisions of real estate investment trusts (REITs). For issuances made between 1997 and 2006, we find strong support for the market timing theory of capital structure. Controlling for past returns and growth, a REIT is more likely to issue equity when its price‐to–net asset value ratio is high. This suggests that REITs issue equity in public markets when the cost of equity capital is lower in the public market than in the private market. Consistent with traditional market timing, REITs are more likely to issue equity after experiencing large price increases. We also find some support for REITs following the trade‐off theory of capital structure. REITs are less likely to issue debt when proxies for expected bankruptcy costs are high.
doi_str_mv 10.1111/j.1540-6229.2009.00255.x
format article
fullrecord <record><control><sourceid>proquest_cross</sourceid><recordid>TN_cdi_proquest_miscellaneous_746073419</recordid><sourceformat>XML</sourceformat><sourcesystem>PC</sourcesystem><sourcerecordid>2381362701</sourcerecordid><originalsourceid>FETCH-LOGICAL-c5235-220265668224fe41d8be6d405c49cdf13a5bde8d739084a35a0c4bd359772c9c3</originalsourceid><addsrcrecordid>eNqNkE1Lw0AQhoMoWKv_IXjxlHSy33vwUGpbC0WhVgQvw3azgdQ0qdkGm39vaqUHT85lBuZ9BuYJgjCBOOlqsI4TziAShOiYAOgYgHAe78-C3mlx3s2gIFKCwGVw5f0aABItoRcMhmU4LE3R-tyHVRYuxrNl-OJsU-e7Npx535jSuvDB2dznVemvg4vMFN7d_PZ-8DoZL0eP0fx5OhsN55HlhPKIECCCC6EIYZljSapWTqQMuGXapllCDV-lTqWSalDMUG7AslVKuZaSWG1pP7g73t3W1Wfj_A43ubeuKEzpqsajZAIkZYnukrd_kuuqqbuXPCpJiZBaiS6kjiFbV97XLsNtnW9M3WICePCIazzowoMuPHjEH4-479D7I_qVF679N4eL8XjUTR0fHfnc79z-xJv6A4WkkuPb0xQXbML14p2iot9ym4TU</addsrcrecordid><sourcetype>Aggregation Database</sourcetype><iscdi>true</iscdi><recordtype>article</recordtype><pqid>873267986</pqid></control><display><type>article</type><title>An Analysis of REIT Security Issuance Decisions</title><source>EconLit s plnými texty</source><source>Business Source Ultimate【Trial: -2024/12/31】【Remote access available】</source><source>Wiley</source><creator>Boudry, Walter I. ; Kallberg, Jarl G. ; Liu, Crocker H.</creator><creatorcontrib>Boudry, Walter I. ; Kallberg, Jarl G. ; Liu, Crocker H.</creatorcontrib><description>This article tests the ability of traditional capital structure theories to explain the issuance decisions of real estate investment trusts (REITs). For issuances made between 1997 and 2006, we find strong support for the market timing theory of capital structure. Controlling for past returns and growth, a REIT is more likely to issue equity when its price‐to–net asset value ratio is high. This suggests that REITs issue equity in public markets when the cost of equity capital is lower in the public market than in the private market. Consistent with traditional market timing, REITs are more likely to issue equity after experiencing large price increases. We also find some support for REITs following the trade‐off theory of capital structure. REITs are less likely to issue debt when proxies for expected bankruptcy costs are high.</description><identifier>ISSN: 1080-8620</identifier><identifier>EISSN: 1540-6229</identifier><identifier>DOI: 10.1111/j.1540-6229.2009.00255.x</identifier><language>eng</language><publisher>Malden, USA: Blackwell Publishing Inc</publisher><subject>Capital structure ; Decision making ; Equity ; Market timing ; Rates of return ; REITs ; Studies</subject><ispartof>Real estate economics, 2010-03, Vol.38 (1), p.91-120</ispartof><rights>2009 American Real Estate and Urban Economics Association</rights><rights>Copyright American Real Estate and Urban Economic Association Spring 2010</rights><lds50>peer_reviewed</lds50><oa>free_for_read</oa><woscitedreferencessubscribed>false</woscitedreferencessubscribed><citedby>FETCH-LOGICAL-c5235-220265668224fe41d8be6d405c49cdf13a5bde8d739084a35a0c4bd359772c9c3</citedby><cites>FETCH-LOGICAL-c5235-220265668224fe41d8be6d405c49cdf13a5bde8d739084a35a0c4bd359772c9c3</cites></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><link.rule.ids>314,780,784,27924,27925</link.rule.ids></links><search><creatorcontrib>Boudry, Walter I.</creatorcontrib><creatorcontrib>Kallberg, Jarl G.</creatorcontrib><creatorcontrib>Liu, Crocker H.</creatorcontrib><title>An Analysis of REIT Security Issuance Decisions</title><title>Real estate economics</title><description>This article tests the ability of traditional capital structure theories to explain the issuance decisions of real estate investment trusts (REITs). For issuances made between 1997 and 2006, we find strong support for the market timing theory of capital structure. Controlling for past returns and growth, a REIT is more likely to issue equity when its price‐to–net asset value ratio is high. This suggests that REITs issue equity in public markets when the cost of equity capital is lower in the public market than in the private market. Consistent with traditional market timing, REITs are more likely to issue equity after experiencing large price increases. We also find some support for REITs following the trade‐off theory of capital structure. REITs are less likely to issue debt when proxies for expected bankruptcy costs are high.</description><subject>Capital structure</subject><subject>Decision making</subject><subject>Equity</subject><subject>Market timing</subject><subject>Rates of return</subject><subject>REITs</subject><subject>Studies</subject><issn>1080-8620</issn><issn>1540-6229</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2010</creationdate><recordtype>article</recordtype><recordid>eNqNkE1Lw0AQhoMoWKv_IXjxlHSy33vwUGpbC0WhVgQvw3azgdQ0qdkGm39vaqUHT85lBuZ9BuYJgjCBOOlqsI4TziAShOiYAOgYgHAe78-C3mlx3s2gIFKCwGVw5f0aABItoRcMhmU4LE3R-tyHVRYuxrNl-OJsU-e7Npx535jSuvDB2dznVemvg4vMFN7d_PZ-8DoZL0eP0fx5OhsN55HlhPKIECCCC6EIYZljSapWTqQMuGXapllCDV-lTqWSalDMUG7AslVKuZaSWG1pP7g73t3W1Wfj_A43ubeuKEzpqsajZAIkZYnukrd_kuuqqbuXPCpJiZBaiS6kjiFbV97XLsNtnW9M3WICePCIazzowoMuPHjEH4-479D7I_qVF679N4eL8XjUTR0fHfnc79z-xJv6A4WkkuPb0xQXbML14p2iot9ym4TU</recordid><startdate>20100301</startdate><enddate>20100301</enddate><creator>Boudry, Walter I.</creator><creator>Kallberg, Jarl G.</creator><creator>Liu, Crocker H.</creator><general>Blackwell Publishing Inc</general><general>Blackwell Publishing Ltd</general><scope>BSCLL</scope><scope>AAYXX</scope><scope>CITATION</scope><scope>7U1</scope><scope>7U2</scope><scope>C1K</scope></search><sort><creationdate>20100301</creationdate><title>An Analysis of REIT Security Issuance Decisions</title><author>Boudry, Walter I. ; Kallberg, Jarl G. ; Liu, Crocker H.</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c5235-220265668224fe41d8be6d405c49cdf13a5bde8d739084a35a0c4bd359772c9c3</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2010</creationdate><topic>Capital structure</topic><topic>Decision making</topic><topic>Equity</topic><topic>Market timing</topic><topic>Rates of return</topic><topic>REITs</topic><topic>Studies</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>Boudry, Walter I.</creatorcontrib><creatorcontrib>Kallberg, Jarl G.</creatorcontrib><creatorcontrib>Liu, Crocker H.</creatorcontrib><collection>Istex</collection><collection>CrossRef</collection><collection>Risk Abstracts</collection><collection>Safety Science and Risk</collection><collection>Environmental Sciences and Pollution Management</collection><jtitle>Real estate economics</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Boudry, Walter I.</au><au>Kallberg, Jarl G.</au><au>Liu, Crocker H.</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>An Analysis of REIT Security Issuance Decisions</atitle><jtitle>Real estate economics</jtitle><date>2010-03-01</date><risdate>2010</risdate><volume>38</volume><issue>1</issue><spage>91</spage><epage>120</epage><pages>91-120</pages><issn>1080-8620</issn><eissn>1540-6229</eissn><abstract>This article tests the ability of traditional capital structure theories to explain the issuance decisions of real estate investment trusts (REITs). For issuances made between 1997 and 2006, we find strong support for the market timing theory of capital structure. Controlling for past returns and growth, a REIT is more likely to issue equity when its price‐to–net asset value ratio is high. This suggests that REITs issue equity in public markets when the cost of equity capital is lower in the public market than in the private market. Consistent with traditional market timing, REITs are more likely to issue equity after experiencing large price increases. We also find some support for REITs following the trade‐off theory of capital structure. REITs are less likely to issue debt when proxies for expected bankruptcy costs are high.</abstract><cop>Malden, USA</cop><pub>Blackwell Publishing Inc</pub><doi>10.1111/j.1540-6229.2009.00255.x</doi><tpages>30</tpages><oa>free_for_read</oa></addata></record>
fulltext fulltext
identifier ISSN: 1080-8620
ispartof Real estate economics, 2010-03, Vol.38 (1), p.91-120
issn 1080-8620
1540-6229
language eng
recordid cdi_proquest_miscellaneous_746073419
source EconLit s plnými texty; Business Source Ultimate【Trial: -2024/12/31】【Remote access available】; Wiley
subjects Capital structure
Decision making
Equity
Market timing
Rates of return
REITs
Studies
title An Analysis of REIT Security Issuance Decisions
url http://sfxeu10.hosted.exlibrisgroup.com/loughborough?ctx_ver=Z39.88-2004&ctx_enc=info:ofi/enc:UTF-8&ctx_tim=2025-01-02T09%3A56%3A15IST&url_ver=Z39.88-2004&url_ctx_fmt=infofi/fmt:kev:mtx:ctx&rfr_id=info:sid/primo.exlibrisgroup.com:primo3-Article-proquest_cross&rft_val_fmt=info:ofi/fmt:kev:mtx:journal&rft.genre=article&rft.atitle=An%20Analysis%20of%20REIT%20Security%20Issuance%20Decisions&rft.jtitle=Real%20estate%20economics&rft.au=Boudry,%20Walter%20I.&rft.date=2010-03-01&rft.volume=38&rft.issue=1&rft.spage=91&rft.epage=120&rft.pages=91-120&rft.issn=1080-8620&rft.eissn=1540-6229&rft_id=info:doi/10.1111/j.1540-6229.2009.00255.x&rft_dat=%3Cproquest_cross%3E2381362701%3C/proquest_cross%3E%3Cgrp_id%3Ecdi_FETCH-LOGICAL-c5235-220265668224fe41d8be6d405c49cdf13a5bde8d739084a35a0c4bd359772c9c3%3C/grp_id%3E%3Coa%3E%3C/oa%3E%3Curl%3E%3C/url%3E&rft_id=info:oai/&rft_pqid=873267986&rft_id=info:pmid/&rfr_iscdi=true