Abstract
Using a novel and detailed transaction-level data set of commercial real estate assets, we construct real estate asset portfolios for a comprehensive set of public firms between 2000 and 2013. We find that bank loan spreads incorporate information not only on the alternative uses of a borrower's real estate portfolio, but also on the number of that portfolio's potential buyers. Using surges of foreign investor demand from countries with increased policy uncertainty and also local land-supply elasticity information, we identify plausibly exogenous shocks to commercial real estate prices. We find that, after a region experiences large foreign investor demand, loan spreads become less sensitive to collateral value of real estate holdings.
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