The Financing Decisions of REITs: The Case of Warrant Extensions

John S Howe and Peihwang Wei

The Journal of Real Estate Finance and Economics, 1994, vol. 8, issue 3, 235-43

Abstract: In this paper, we examine the warrant price and stock price reactions to the announcement of warrant life extensions by REITs. As predicted by option pricing theory, warrant prices increase in response to these extensions. The stocks of REITs making the extension announcement experience average abnormal returns that are not significantly different from zero. Thus, total firm value appears to increase, with the gains accruing primarily to the warrantholders. Copyright 1994 by Kluwer Academic Publishers

Date: 1994
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Persistent link: https://EconPapers.repec.org/RePEc:kap:jrefec:v:8:y:1994:i:3:p:235-43

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