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Corporate Real Estate and Corporate Takeovers: International Evidence

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Author Info

  • Dirk Brounen

    ()
    (RSM Erasmus University 3000 DR Rotterdam,The Netherlands)

  • Mathijs van Dijk

    (RSM Erasmus University 3000 DR Rotterdam,The Netherlands)

  • Piet M.A. Eichholtz

    ()
    (Maastricht University P.O. Box 616, NL-6200 MD Maastricht, The Netherlands)

Abstract

We investigate whether corporate real estate ownership is a trigger for takeovers. The empirical analysis is based on a sample covering 225 takeovers in France, Germany, the Netherlands, and the United Kingdom between 1992 and 2003. Using a multivariate probit model in which we control for various financial firm characteristics we find that the role of corporate real estate in takeovers depends on the nature of the takeover, the industry, the period, and the country. The presence of corporate real estate is a significantly positive predictor for takeovers within the same industry. Companies that have been taken over appear to have been reducing their real estate holdings prior to the takeover, which would suggest a financial distress situation.

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File URL: http://aux.zicklin.baruch.cuny.edu/jrer/papers/pdf/past/vol30n03/02.293_314.pdf
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Bibliographic Info

Article provided by American Real Estate Society in its journal journal of Real Estate Research.

Volume (Year): 30 (2008)
Issue (Month): 3 ()
Pages: 293-314

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Handle: RePEc:jre:issued:v:30:n:3:2008:p:293-314

Contact details of provider:
Postal: American Real Estate Society Clemson University School of Business & Behavioral Science Department of Finance 401 Sirrine Hall Clemson, SC 29634-1323
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Web page: http://www.aresnet.org/

Order Information:
Postal: Diane Quarles American Real Estate Society Manager of Member Services Clemson University Box 341323 Clemson, SC 29634-1323
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Web: http://aux.zicklin.baruch.cuny.edu/jrer/about/get.htm

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References

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  1. Yongheng Deng & Joseph Gyourko, . "Real Estate Ownership by Non-Real Estate Firms: An Estimate of the Impact on Firm Returns," Zell/Lurie Center Working Papers 321, Wharton School Samuel Zell and Robert Lurie Real Estate Center, University of Pennsylvania.
  2. Wruck, Karen Hopper, 1990. "Financial distress, reorganization, and organizational efficiency," Journal of Financial Economics, Elsevier, vol. 27(2), pages 419-444, October.
  3. Michael J. Seiler & Arjun Chatrath & James R. Webb, 2001. "Real Asset Ownership and the Risk and Return to Stockholders," Journal of Real Estate Research, American Real Estate Society, vol. 22(1/2), pages 199-212.
  4. Peter R. Veale, 1989. "Managing Corporate Real Estate Assets: Current Executive Attitudes and Prospects for an Emergent Management Discipline," Journal of Real Estate Research, American Real Estate Society, vol. 4(3), pages 1-22.
  5. Booth, G Geoffrey & Glascock, John L & Sarkar, Salil K, 1996. "A Reexamination of Corporate Sell-Offs of Real Estate Assets," The Journal of Real Estate Finance and Economics, Springer, vol. 12(2), pages 195-202, March.
  6. John L. Glascock & Wallace N. Davidson & C. F. Sirmans, 1991. "The Gains from Corporate Selloffs: The Case of Real Estate Assets," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 19(4), pages 567-582.
  7. Kim Hiang Liow, 2004. "Corporate Real Estate and Stock Market Performance," The Journal of Real Estate Finance and Economics, Springer, vol. 29(1), pages 119-140, 07.
  8. Clark, Kent & Ofek, Eli, 1994. "Mergers as a Means of Restructuring Distressed Firms: An Empirical Investigation," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 29(04), pages 541-565, December.
  9. Ronald C. Rutherford, 1990. "Empirical Evidence on Shareholder Value and the Sale-Leaseback of Corporate Real Estate," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 18(4), pages 522-529.
  10. Gregor Andrade & Mark Mitchell & Erik Stafford, 2001. "New Evidence and Perspectives on Mergers," Journal of Economic Perspectives, American Economic Association, vol. 15(2), pages 103-120, Spring.
  11. Dirk Brounen & Piet Eichholtz, 2004. "Development Involvement and Property Share Performance: International Evidence," The Journal of Real Estate Finance and Economics, Springer, vol. 29(1), pages 79-97, 07.
  12. Mitchell, Mark L. & Mulherin, J. Harold, 1996. "The impact of industry shocks on takeover and restructuring activity," Journal of Financial Economics, Elsevier, vol. 41(2), pages 193-229, June.
  13. Espahbodi, Hassan & Espahbodi, Pouran, 2003. "Binary choice models and corporate takeover," Journal of Banking & Finance, Elsevier, vol. 27(4), pages 549-574, April.
  14. Barnes, Paul, 1999. " Predicting UK Takeover Targets: Some Methodological Issues and an Empirical Study," Review of Quantitative Finance and Accounting, Springer, vol. 12(3), pages 283-301, May.
  15. Ezzell, John R. & Vora, Premal P., 2001. "Leasing versus purchasing: Direct evidence on a corporation's motivations for leasing and consequences of leasing," The Quarterly Review of Economics and Finance, Elsevier, vol. 41(1), pages 33-47.
  16. Ambrose, Brent W. & Megginson, William L., 1992. "The Role of Asset Structure, Ownership Structure, and Takeover Defenses in Determining Acquisition Likelihood," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 27(04), pages 575-589, December.
  17. William B. Brueggeman & Jeffrey D. Fisher & David M. Porter, 1990. "Rethinking Corporate Real Estate," Journal of Applied Corporate Finance, Morgan Stanley, vol. 3(1), pages 39-50.
  18. F. C. Neil Myer & Ling T. He & James R. Webb, 1992. "Sell-Offs of U.S. Real Estate: The Effect of Domestic versus Foreign Buyers on Shareholder Wealth," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 20(3), pages 487-500.
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