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The Separation of Real Estate Operations By Spin‐Off

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  • Gailen L. Hite
  • James E. Owers
  • Ronald C. Rogers

Abstract

In this paper, we consider spin‐offs as a vehicle to separate real estate operations from other real estate and/or non‐real estate operations. For a sample of 33 such spin‐offs announced and completed between 1962 and 1982, we document significantly positive abnormal returns around spin‐off announcements. Using the standard event‐time methodology, we find average excess returns of 5.7% in the two‐day interval surrounding the first Wall Street Journal report of a pending spin‐off. While the gains associated with spin‐offs by real estate firms are positive on average, they are small in comparison to the 9.1% two‐day announcement period abnormal returns surrounding proposals by non‐real estate firms to divest real estate operations.

Suggested Citation

  • Gailen L. Hite & James E. Owers & Ronald C. Rogers, 1984. "The Separation of Real Estate Operations By Spin‐Off," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 12(3), pages 318-332, September.
    • Handle: RePEc:bla:reesec:v:12:y:1984:i:3:p:318-332
    DOI: 10.1111/1540-6229.00325
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    References listed on IDEAS

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    Cited by:

    1. Wallace N. Davidson III & James L. McDonald, 1987. "Evidence Of The Effect On Shareholder Wealth Of Corporate Spinoffs: The Creation Of Royalty Trusts," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 10(4), pages 321-328, December.
    2. 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.
    3. Darrat, Ali F & Glascock, John L, 1993. "On the Real Estate Market Efficiency," The Journal of Real Estate Finance and Economics, Springer, vol. 7(1), pages 55-72, July.
    4. Ronald C. Rutherford & Robert W. Stone, 1989. "Corporate Real Estate Unit Formation: Rationale, Industry, and Type of Unit," Journal of Real Estate Research, American Real Estate Society, vol. 4(3), pages 121-130.
    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.

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