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Under the Lender’s Looking Glass

Mariya Letdin ()
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Mariya Letdin: Florida State University

The Journal of Real Estate Finance and Economics, 2017, vol. 55, issue 4, 435-456

Abstract: Abstract This paper studies the impact of bank monitoring on the risk of US equity REITs. Using a unique, hand-collected data sample of mortgage balances, I show that bank screening and monitoring of REIT assets via utilizing secured mortgage financing (vs unsecured, public debt) lowers the overall company risk of a REIT. At the asset level, screening results in retail and office assets with higher acquisition values and located in primary markets, i.e., more transparent assets, being pledged as collateral. Further, I find evidence consistent with the role of lender monitoring for secured mortgage loans and show that properties located in closer proximity to a REIT’s headquarters are more likely to be pledged as collateral for a mortgage.

Keywords: Collateral; REIT; Secured Debt; Lender Monitoring (search for similar items in EconPapers)
Date: 2017
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The Journal of Real Estate Finance and Economics is currently edited by Steven R. Grenadier, James B. Kau and C.F. Sirmans

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Handle: RePEc:kap:jrefec:v:55:y:2017:i:4:d:10.1007_s11146-016-9561-4