Monetization of Corporate Real Estate

The monetization of corporate real estate is gaining importance. This applies to both owneroccupied real estate and surplus assets, as real estate frequently diminishes rather than adds to the shareholder value of non-property companies. However, despite the numerous announcements of large portfolio transactions only few large scale transactions have been closed in the last few years. The lack of successful monetization transactions can be attributed to two basic reasons., One is the lack of a strategic approach to the disposal of corporate real estate. The other is the structure of corporate real estate assets, of which many are not suitable for investment purposes without prior enhancement. In this paper, the authors try to examine the current potential for the monetization of corporate real estate of major German listed companies. For this purpose we conducted a survey of the 100 most relevant German listed non-property companies to identify the ratio between assets, that are suitable for investment by third parties and those that are too specialized. On this basis we analysed the balance sheets of the respective companies to assess the total amount of investible corporate real estate. The results are presented in the paper, also taking into account that book values might not reflect current market values.