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The Performance of Acquisitions in the Real Estate Investment Trust Industry

  • Olgun Fuat Sahin


    (Minnesota State University Moorhead, 1104 Seventh Avenue South, 2070 Center for Business, Moorhead, MN 56563)

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    This study examines the performance of acquisitions in the Real Estate Investment Trust (REIT) industry around the acquisition announcement and in the long-run. The results suggest that the acquiring REITs experience statistically signi?cant negative abnormal returns while the target REITs earn statistically signi?cant positive abnormal returns during the three-day period around the announcement. The long-run performance of the acquiring REITs is analyzed using size benchmark portfolios with the buy-and-hold, cumulative average and mean calendar time abnormal returns, as well as the Fama–French Three Factor Model. None of the other methods detect signi?cant abnormal returns in the long-run with the exception of the buy-and-hold abnormal return. Further analysis shows that the long-run positive buy-and-hold abnormal return is consistent with an unexpected decline in cost of equity after acquisitions.

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

    Volume (Year): 27 (2005)
    Issue (Month): 3 ()
    Pages: 321-342

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    Handle: RePEc:jre:issued:v:27:n:3:2005:p:321-342
    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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    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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