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Corporate Real Estate Sale and Leaseback Effect: Empirical Evidence from Europe

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  • Tomi Grönlund
  • Antti Louko
  • Mika Vaihekoski

Abstract

"Corporate real estate disposals have increased in Europe during the past few years. In this research paper, we study market reactions of publicly traded European companies' real estate sale and leaseback announcements during 1998-2004. This study is one of the first ones to study the sale and leaseback impact on corporate value with a pan-European data. We find that the sale and leaseback announcements have on average positive impact to firm's value which is in line with the previous studies. However, we also find that the positive effect is mainly caused by the deals with high transaction value to company market value ratio. Smaller transactions do not create on average any abnormal returns. Our results support the hypothesis that the positive sale and leaseback announcement effect is a consequence of revealed hidden value of the company's assets. Thus, sale and leaseback can also be seen as a mechanism for revealing the hidden value of company's assets to the market." Copyright (c) 2008 The Authors Journal compilation (c) 2008 Blackwell Publishing Ltd.

Suggested Citation

  • Tomi Grönlund & Antti Louko & Mika Vaihekoski, 2008. "Corporate Real Estate Sale and Leaseback Effect: Empirical Evidence from Europe," European Financial Management, European Financial Management Association, vol. 14(4), pages 820-843.
  • Handle: RePEc:bla:eufman:v:14:y:2008:i:4:p:820-843
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    File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1468-036X.2007.00417.x
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    References listed on IDEAS

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    1. Miller, Merton H & Upton, Charles W, 1976. "Leasing, Buying, and the Cost of Capital Services," Journal of Finance, American Finance Association, vol. 31(3), pages 761-786, June.
    2. Ambrose, Brent William, 1990. "Corporate Real Estate's Impact on the Takeover Market," The Journal of Real Estate Finance and Economics, Springer, vol. 3(4), pages 307-322, December.
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    Cited by:

    1. Longinidis, Pantelis & Georgiadis, Michael C., 2014. "Integration of sale and leaseback in the optimal design of supply chain networks," Omega, Elsevier, vol. 47(C), pages 73-89.
    2. Noriko Ashiya, 2015. "Determinants of Potential Seller/Lessee Benefits in Sale¡VLeaseback Transactions," International Real Estate Review, Asian Real Estate Society, vol. 18(1), pages 89-112.

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