DEBT CAPITAL MARKETS AS A FUNDING SOURCE FOR LISTED PROPERTY FUNDS IN SOUTH AFRICA

Colin Murphy () and Chris Cloete ()
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Colin Murphy: Department of Construction Economics, University of Pretoria
Chris Cloete: Department of Construction Economic, University of Pretoria

No 9011564, Proceedings of International Academic Conferences from International Institute of Social and Economic Sciences

Abstract: Purpose of paperProperty finance in South Africa has traditionally been a market dominated by bank lend-ing. However in the context of the Basel III Accord creating cost and other regulatory impli-cations for bank lending, as well a maturing listed property market adopting international best practice in the form of REIT legislation, debt capital markets funding is becoming a significant component of REITs? capital structure. The study seeks to determine the merits and impact of this nascent funding source for REITs in South Africa. MethodologyFollowing a review of applicable literature, interviews with senior management of nine listed property funds and other debt capital markets stakeholders were undertaken. Cer-tain advantages and disadvantages of debt capital markets funding, in comparison to other lending sources, were presented as hypotheses to the interviewees. FindingsThe responses show support from a significant majority of the interviewees for four partic-ular advantages and two disadvantages. The study also found support for these ad-vantages and disadvantages to be transient. Value of paperIt is advised that REITs periodically reassess the respective advantages and disadvantages of this funding source for their business.

Keywords: REIT; Basel III; debt capital funding (search for similar items in EconPapers)
JEL-codes: G19 G23 G30 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2019-06
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Published in Proceedings of the Proceedings of the 45th International Academic Conference, London, Jun 2019, pages 148-173

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Persistent link: https://EconPapers.repec.org/RePEc:sek:iacpro:9011564

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