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Does Corporate Real Estate Value Matter for Stock Returns?

Author

Listed:
  • Anil Kumar
  • Carles Vergara-Alert

Abstract

In this article we study the effect of change in the market value of corporate real estate (CRE) assets on firms' stock returns. We show that a positive shock in the value of CRE assets positively affects stock returns of real estate owning firms. We further document - "real estate based stock return comovement" - that is, stock returns of firms which either experience increase in their pledgeable collateral, or own higher proportion of CRE assets, or both comove with each other and this comovement is cyclical in nature. We also show that the degree of comovement is higher in the periods of increasing values of CRE, as well as for firms that are financially constrained and headquartered in the same geographical area.

Suggested Citation

  • Anil Kumar & Carles Vergara-Alert, 2018. "Does Corporate Real Estate Value Matter for Stock Returns?," ERES eres2018_251, European Real Estate Society (ERES).
    • Handle: RePEc:arz:wpaper:eres2018_251
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    File URL: https://eres.architexturez.net/system/files/P_20180131191248_780.pdf
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    References listed on IDEAS

    as
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    6. Christo Pirinsky & Qinghai Wang, 2006. "Does Corporate Headquarters Location Matter for Stock Returns?," Journal of Finance, American Finance Association, vol. 61(4), pages 1991-2015, August.
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    Keywords

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    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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