The debt structure - and the complexity of it - affects both agency and bankruptcy costs. For bankruptcy costs, the effects of debt complexity channel through increasing negotiation costs and decreasing liquidation value. In this paper we analyse, how debt complexity affects firm valuations. Employing a sample of 215 U.S. equity REITs, we construct a HHI-index based measure of debt complexity and analyse the effect of debt complexity on Tobin’s Q. We find that higher debt complexity is associated with lower firm values during recessions, consistent with our hypothesis that the effect is due to bankruptcy costs. The effect is economically and statistically significant and robust to alternative specifications.