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


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Mamoru Nagano

223 / 248




International Real Estate Review


By using data on 51 real estate investment trusts (REITs) and 755 real estate deals from 2003-2011 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.

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