Information asymmetry exists between the lender and the borrower regarding the holding period of the mortgaged real estate; the lender does not know how long the borrower plans to own the house. This information asymmetry allows the cost of obtaining a mortgage to deviate from its value to the...

REITs offer the opportunity to examine the relationship between capital structure and cost of capital in the absence of corporate earnings taxes. The evidence supports the leverage clientele effect as the motivation for the use of financial leverage by REITs. Copyright American Real Estate and...