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The Interrelationships Between Reit Capital Structure And Investment, Jamie Alcock, Eva Steiner
The Interrelationships Between Reit Capital Structure And Investment, Jamie Alcock, Eva Steiner
Eva Steiner
We explore the interdependence of investment and financing choices in US listed Real Estate Investment Trusts (REITs) in the period 1973-2011. We find that the investment and financing choices of REITs are interdependent, but they are not made simultaneously. Our results suggest that investment determines leverage, but leverage has no apparent effect on investment decisions. Conversely, the debt-overhang conflict between shareholders and debt holders that theoretically drives the reverse influence of leverage on the optimal investment policy does not appear to filter through to the actual investment choices of REITs. Rather, we find that REIT managers utilize the maturity dimension …