The Role of Sponsor and External Management on the Capital Structure of Asian-Pacific REITs: The Case of Australia, Japan, and Singapore

Abstract

This paper studies how the presence of sponsor and external management affect leverage and debt maturity decisions in three major Asian-Pacific REIT markets: Australia, Japan and Singapore. Our empirical results indicate that sponsored REITs opt for higher levels of leverage and loans with longer maturity. On the contrary, externally managed REITs are associated with lower leverage and loans with shorter maturity. Our results are robust to the inclusion of other firm variables and to alternative specifications. Subsequent to the financial crisis, the impact of sponsorship on debt financing decisions has diminished, and borrowing of externally managed REITs is further constrained.

The impact of macroeconomic factors on the real estate investment trust index return on Japan, Singapore and China

“…The occupancy rate and rent of office buildings and shopping centres in Singapore are maintained at high levels because this nation is densely populated; thus, the dividends of REITs in Singapore have remained high. Chen et al (2014) suggest that Japanese and Singaporean REITs were based on the Australian market that was predominantly managed after the early US REIT market.…”