Economics, Econometrics and Finance
8 years ago

Tax-neutral REITs in Europe opt for less debt than taxed counterparts.

Nordic Journal of Surveying and Real Estate Research
European Listed Real Estate: The Capital Structure Perspective
Jaakko Niskanen, Heidi Falkenbach

Paper Summary

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European listed real estate companies, including tax-neutral REITs and tax-paying REOCs, have different capital structures. Tax-neutral REITs are less leveraged than taxed REOCs. This could be due to tax neutrality and a desire to avoid agency costs. The difference in leverage between REITs and REOCs is consistent across the sample studied.