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The Impact of Corporate Real Estate Unit Formation on the Parent Firm's Value

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Abstract

This research investigates the valuation impact of the formation of a Corporate Real Estate Unit (CREU) on the stock price of the parent organization. Using standard event study methodology, the empirical tests show that the formation of a CREU, in general, is associated with positive gains to shareholders. The largest gains are associated with the publicly traded subsidiaries. The next largest gains are associated with the Master Limited Partnerships and the wholly owned subsidiaries.

Suggested Citation

  • Ronald C. Rutherford & Hugh O. Nourse, 1988. "The Impact of Corporate Real Estate Unit Formation on the Parent Firm's Value," Journal of Real Estate Research, American Real Estate Society, vol. 3(3), pages 73-84.
    • Handle: RePEc:jre:issued:v:3:n:3:1988:p:73-84
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    1. Brown, Stephen J. & Warner, Jerold B., 1985. "Using daily stock returns : The case of event studies," Journal of Financial Economics, Elsevier, vol. 14(1), pages 3-31, March.
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    Cited by:

    1. Donald G. Christensen & Donald R. Levi, 1993. "Why Do Real Estate Master Limited Partnerships Seem to be Undervalued?," Journal of Real Estate Research, American Real Estate Society, vol. 8(1), pages 1-12.
    2. Roger M. Shelor & Dwight C. Anderson & Mark L. Cross, 1990. "The Impact of the California Earthquake on Real Estate Firms' Stock Value," Journal of Real Estate Research, American Real Estate Society, vol. 5(3), pages 335-340.
    3. Julan Du & Charles Ka Yui Leung & Derek Chu, 2014. "Return Enhancing, Cash-rich or simply Empire-Building? An Empirical Investigation of Corporate Real Estate Holdings," International Real Estate Review, Global Social Science Institute, vol. 17(3), pages 301-357.
    4. Eetu Ristaniemi & Anna-Liisa Lindholm, 2011. "Added Value of Corporate Real Estate Management in Industrial Premises," ERES eres2011_134, European Real Estate Society (ERES).
    5. Wei Kium Teoh, 1993. "Corporate Real Estate Management: The New Zealand Evidence," Journal of Real Estate Research, American Real Estate Society, vol. 8(4), pages 607-624.
    6. Dirk Brounen & Mathijs van Dijk & Piet M.A. Eichholtz, 2008. "Corporate Real Estate and Corporate Takeovers: International Evidence," Journal of Real Estate Research, American Real Estate Society, vol. 30(3), pages 293-314.
    7. Mike Miles & John Pringle & Brian Webb, 1989. "Modeling the Corporate Real Estate Decision," Journal of Real Estate Research, American Real Estate Society, vol. 4(3), pages 47-66.

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    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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