THE CAPITAL STRUCTURE DETERMINANTS OF REITs

THE CAPITAL STRUCTURE DETERMINANTS OF REITs

• Autor
• JOÃO LIBANORI
• Co-autores
• OLIVIERO ROGGI , Cristiane Benetti
• Resumo

• This paper examines the determinants of the REIT capital structure, assessing the applicability of capital structure theories—trade-off, pecking order, agency costs, and market timing—to Brazilian REITs, which operate under a distinct regulatory framework. Using OLS models and data from Brazilian Equity REITs, we find that while the overall determinants align with the international literature, the REIT's accounting equity is significantly impacted by the semi-annual mandatory payout of 95% of its Adjusted Funds from Operations. Additionally, the study introduces a new determinant, total management compensation, which is found to have a negative influence on market leverage.

   

  This result corroborates the REIT literature, which mostly rejects the pecking order and supports market timing theory, because management has direct incentives to expand the REIT through new equity raisings, especially when market conditions are favourable, as most of their compensation comes from a percentage of the REIT’s accounting equity or market capitalization.

• Palavras-chave
• REIT, Optimal Capital Structure Theory, Trade Off Theory, Pecking Order Theory, Market Timing Theory, Agency Costs Theory.
• Modalidade
• Comunicação oral
• Área Temática
• Finanças Corporativas e Bancárias

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