New financing opportunities for airports: Exploring the possibility of a speciality REIT

Abstract

Canada's airports have undergone a massive decentralisation initiative whereby the federal government has devolved responsibility for what was once considered a public utility to the private sector. While the role of airports in Canada still includes economic development and being responsive to local needs, it is important to note that there will not be any government funding for airport expansion or refurbishment. Paying for infrastructure development is expensive and airport financing traditionally has involved corporate debt instruments. This paper explores the possibility of using equity as a means of financing airports, specifically in the form of a real-estate investment trust (REIT). Using a REIT as a financing vehicle can provide increased funding and lower risk for the expansion and maintenance of airport facilities.