Evidence From Tax-Exempt Firms on Motives for Participating in Sale-Leaseback Agreements
- Topics:
- Strategic Leasing,
- Tax Incentives
- Tags:
- Business Operations,
- REIT,
- Real Estate,
- Lessor,
- Leasing,
- Free Trade,
- Financial Planning,
- Finance,
- Capital Structures,
- Taxes
- Source:
- Louisiana State University
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Overview: Previous research finds evidence that tax factors motivate the participants in leasing transactions. Tax-arbitrage arguments predict that leasing participants gain when the lessor's tax rate exceeds that of the lessee. This paper presents a research that employs a sample of effectively tax-exempt REIT lessors to explore alternative leasing motives. Changes in REIT qualification rules are examined to develop an Agency-Cost, and competing Income-Retention Hypothesis for lessors. The rules and changes suggest that REIT management has the incentive, motive and opportunity to make real-estate investments quickly. The evidence developed is consistent with agency-costs arising from the possibility that they may overpay for properties.
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Format: PDF | Size: 252KB | Date: Feb 2005 | Pages: 36
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