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The wealth effects of REIT property acquisitions and dispositions: the creditors’ perspective

Li, Q., Ling, D. C., Mori, M. and Ong, S. E. (2018) The wealth effects of REIT property acquisitions and dispositions: the creditors’ perspective. The Journal of Real Estate Finance and Economics. ISSN 0895-5638

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To link to this item DOI: 10.1007/s11146-018-9677-9

Abstract/Summary

Prior studies of REIT property transaction activity focus on shareholder wealth effects. This study examines the effects of property acquisitions, dispositions, and overall trading activity on unsecured bond spreads, credit rating changes, and rating outlooks using a sample of the listed equity REITs in the U.S. We find that active property trading in general decreases creditors’ wealth, but this negative impact is significantly mitigated for REITs with positive NAV premiums and when REITs use sale proceeds to pay down debt after the transactions. We also find that property transactions followed by an increased geographic focus significantly increase bond yield spreads and decrease the probability of credit rating upgrades.

Item Type:Article
Refereed:Yes
Divisions:Henley Business School > Real Estate and Planning
ID Code:79270
Publisher:Springer

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