Debt capacity of real estate collateral

Erasmo Giambona, Joseph Golec, Armin Schwienbacher

Research output: Contribution to journalArticlepeer-review

14 Scopus citations


We study whether real estate assets have a greater positive influence on firm leverage than other tangible assets. Using a large sample of COMPUSTAT firms, we find a significant positive relation between tangibility and leverage in general, and the relation is strongest for real estate collateral. Furthermore, we find that the relation holds only for credit-constrained firms, i.e., those likely to highly value the additional borrowing capacity of real estate. Our results imply that knowing the composition of a firm's tangible assets is important in understanding its leverage. Our findings could help explain why real estate investment trusts are relatively highly leveraged, even though debt offers them no tax benefit.

Original languageEnglish (US)
Pages (from-to)578-605
Number of pages28
JournalReal Estate Economics
Issue number3
StatePublished - 2014
Externally publishedYes

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


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