Banking Relationships and Financing Decisions of REITs

Yuanchen Chang (), Yi-Ting Hsieh () and Kiat Ying Seah ()
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Yuanchen Chang: National Chengchi University
Yi-Ting Hsieh: Feng Chia University
Kiat Ying Seah: National University of Singapore

International Real Estate Review, 2024, vol. 27, issue 1, 1-32

Abstract: Banking relationships are key factors that influence the financing decisions of real estate investment trusts (REITs) which are mandated to hold highly specific assets. Using a comprehensive data set of loan facilities by REITs across different markets, this paper empirically tests the effect of REIT-bank relationships on credit costs and other non-price credit terms. We find that REITs with past banking relationships enjoy favorable loan terms that include lower loan rates, higher loan amount, and a less stringent collateral requirement. These favorable terms were kept by relationship banks during the global financial crisis from 2007 to 2009.

Keywords: Bank lending relationship; REITs; Cross-country (search for similar items in EconPapers)
Date: 2024
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