【正文】 nable in the REIT context. To elaborate, high dividend payout reduces retained earnings for REITs so that funding choice is limited to debt and Under this constraint, stock sales may be viewed with less skepticism. In addition, opinion varies on the extent of information asymmetry in the real estate sector. Some hold that with limited investment in human capital, and fewer strategic growth opportunities, REIT assets are relatively easier to value. Others contend that analysis of REIT assets requires special skills and knowledge about conditions of parable properties, plex financing arrangements, and general and local economic trends. Han (2021) argues that fair market values of real estate transactions are difficult to determine because they often include heterogeneous, and illiquid assets. Finally, some authors (. Campbell, Ghosh, and Sirmans, 2021) argue that regulatory provisions restricting the sources of REIT ine, and potential acquisition targets, to the real estate sector, and diffused ownership, exacerbate the information asymmetry problem. Overall, how information asymmetry affects REIT valuation and financing choice is an open question. Because of their high payout requirement, REIT financing decision may not conform also to the dynamic version of the pecking order theory which states that firms reduce current leverage to avoid issuing equity when future capital needs arise. Brown and Riddiough (2021) study the public offerings of equity REITs over the period 1993–1998. The authors report that maturity of REIT public debt is positively related to offer spread which is consistent with the predictions of the target debt ratio model of CollinDufrense and Goldstein (2021). Corroboration for a target longrun debt ratio es from the evidence that majority of the firms issuing debt was clustered just above the investmentgrade rating. Further, a significant number of REITs that issue equity are highly leveraged and remain so subsequently. The authors conclude that REITs largely fund investment with bank lines of credit and other sources of private debt. When these sources are exhausted, REITs access the public capital market and use the issue proceeds to pay down credit lines in order to prepare for the next round of financing. Confirming the trend, Ott et al. (2021) report that REITs finance over 80% of firmspecific investment through equity and longterm debt, clearly a result of the high dividend payment. Our objective is to relate these decisions to the existing theory, REIT investment opportunities and the regulatory structure. Hypotheses The hypotheses are summarized in Table 1. Trade off theory predicts a low target debt ratio. Short term fluctuations in investment opportunities may move the capital structure away from the target, but if firms rebalance, no persistent pattern between leverage and markettobook would exist. The simple pecking order theory invokes information asymmetry between shareholders and managers and predicts a positive relation between debt ratio and investment opportunities. Since REITs are limited in funding options due to high mandatory payout, however, a positive relation between leverage and markettobook may be an artifact of the unique regulatory structure, not purely an attempt to avoid adverse selection costs. The dynamic pecking order theory implies an opposite relationship. The market timing theory which states that managers opportunistically issue equity when market valuations are high and adverse selection costs are low, implies a negat