Ooi, J T L (1999) Financial structure of UK property companies: A research agenda. Journal of Financial Management of Property and Construction, 4(1), pp. 5-30. ISSN 1366-4387
Abstract
This study analysed the aggregated financial statements of the UK quoted property sector between 1985 and 1996. It identified the following stylised facts concerning the sector's financial structure; (a) shareholders' equity is very sensitive to the underlying property market condition; (b) level of indebtedness has rose sharply over the study period,. (c) despite rising debt level, gearing ratios have improved in the recent years mainly because growth in property values and share capitalisation have outstripped growth in debt level,. (d) interest charges dominate other outgoings;(e) debt raising capability is constrained by inability to service loans rather than from a lack of collateral,. (0 rental income provide a stable source of revenue; (g) cashflow management is critical to ensure solvency,. and (h) dividend policy is 'sticky' Discussion on the uniqueness of property companies also pointed out a number of implications on their financing decisions, where the magnitude would be different from firms in other industries. Generally, property companies would employ proportionately higher gearing, longer debt maturity, higher incidence of secured debt and heavier reliance on bank borrowings as compared to companies in other sectors. This is supported by the evidence from the analysis.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | debt, financial structure, property companies, UK property sector |
| Index terms: | income, evidence, financing, property company, research agenda, property market, revenue, property value |
| Subjects: | evaluation and assessment methods, economic analysis, research management, real estate economics |
| Topics: | Business Strategy, Research Practice, Urban Studies |
| Descriptive scope: | 3 PCA |
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