In this paper, the authors examine the stock price reactions to announcements of new security offerings b y real estate investment trusts. Real estate investment trusts offer a unique setting in which to study these events because they do not p ay taxes at the firm level. Theory suggests that the net tax gain to corporate borrowing is unambiguously negative for a real estate inves tment trust. Contrary to some recent studies, however, the authors fi nd a positive stock price reaction to debt offerings, while the negat ive equity issuance effect is preserved. Further, empirical evidence lends support to signaling as the explanation for the positive signif icant debt issuance effect. Copyright 1988 by American Finance Association.