Debt Capital | Propertylogy

Debt Capital

By on September 3, 2019

Debt capital refers to long term funding that has been borrowed to acquire investment assets such as real estate.

In the consumer property market, debt capital is most often in the form of mortgages.

However the term is seldom used to describe consumer home loans.

Instead debt capital is a term that is most often used in business operations that focus on investments such as real estate.

This is partly because financing of asset acquisitions in corporations are seldom limit to regular mortgages. This is especially true for public companies where capital can be raised from the open market through instruments like bonds.

One such example is that of REITs.

The financing strategy of REITs often consist of a mix of different funding channels. Thus, a term such as debt capital which describes all funding put together is more appropriate and avoids sending the wrong message to stakeholders.

Debt capital can also be used as a variable in calculation of investment ratios.

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