Date of Award

Summer 5-20-2015

Degree Type


Degree Name

Doctor of Philosophy (PhD)


Real Estate

First Advisor

Dr. Jonathan A. Wiley

Second Advisor

Dr. Alan J. Ziobrowski

Third Advisor

Dr. Karen M. Gibler

Fourth Advisor

Dr. Ken H. Johnson


This study analyzes the cash holdings of publicly unlisted real estate investment trusts (REITs). Unlisted REITs have an organizational structure characterized by high equity issuance fees, weak governance mechanisms, finite life and distinctive periods during which there is access to public equity. All of these features have important implications for their corporate liquidity management. Using quarterly data from a sample of U.S. equity REITs spanning 1991 to 2013, the evidence provided in this dissertation reveals that unlisted REITs save a significant portion of equity offering proceeds to increase cash holdings and that these cash reserves are consistent with the precautionary motive for cash holdings. Specifically, it is estimated that for each additional dollar of new equity raised, 25 cents is accumulated as cash. The estimated amount of withholding for cash reserves is similar in magnitude even after empirically controlling for other sources of liquidity such as leverage, FFO and bank credit lines.

Comparing unlisted REITs to each other, cash holdings are significantly higher during periods of equity access than when the offering period has expired. In fact, unlisted REITs with equity access hold cash balances that are 43% higher (relative to total assets) than cash balances after the offering period has closed. This finding is explained by the nature of the offering period for unlisted REITs wherein opportunities for cash accumulation are greater due to ongoing equity access and since FFO is less predictable during early stage operations. Further analysis reveals that early-stage cash accumulations are subsequently used to support investment activity.

Extending the comparison to include a sample of propensity score-matched listed REITs reveals that unlisted REITs, on average, hoard between 9% to 22% more cash (depending on post-offering vs. equity access) than their exchange-listed counterparts. Utilization of bank credit lines by unlisted REITs is 28% lower than utilization by listed REITs. The difference in cash holdings and credit line utilization between listed and unlisted REITs is related to lower quality corporate governance mechanisms and the lack of operational transparency at unlisted REITs.

Findings from this research should be useful to academics, policy-makers and investors who seek to understand the dynamics of liquidity management in firms that raise capital under finite-life organizational structure yet function as asset management intermediaries. Overall, the results imply that the increased operational risk in the unlisted REIT sector makes them more inclined to hold excess liquidity reserves, which consist primarily of cash. Cash provides unlisted REITs with self-managed insurance against liquidity shocks and offers greater financial flexibility when compared to banker-managed credit lines. In theory, unlisted REITs can also rely on internally-generated future cash flow to fund liquidity needs but its anticipated flow is rather unpredictable for an early-stage “blind pool” fund.