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 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)
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