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Corporate Real Estate Ownership Implications: International Performance Evidence

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  • Dirk Brounen
  • Piet Eichholtz

Abstract

In this paper we explore corporate real estate ownership internationally. Based on a sample of 4,636 companies from 18 industries and 9 countries we document distinct patterns and trends in the corporate ownership level of real estate. Real estate ownership appears to be driven by industrial rather than national differences, with corporate real estate ratios ranging between 0.13 for Business Services and 0.63 for the Mining sector. Overall, real estate ownership appears to be decreasing over time, which may be due to the gaining popularity of lease alternatives. When analyzing the stock performance of the companies in our sample, we discover a significantly negative relationship between real estate ownership and a firm’s systematic risk. Idiosyncratic risk bears no significant relationship with real estate ownership. With respect to stock returns our results show that returns are lowest among firms with the highest real estate ownership levels in each industry. After controlling for the variation in risks, the remaining return patterns differ strongly across industries, with a significantly negative relationship between stock outperformance and real estate ownership for Communications and Business Services and a positive but not significant relationship for Transportation. Copyright Springer Science + Business Media, Inc. 2005

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  • Dirk Brounen & Piet Eichholtz, 2005. "Corporate Real Estate Ownership Implications: International Performance Evidence," The Journal of Real Estate Finance and Economics, Springer, vol. 30(4), pages 429-445, June.
    • Handle: RePEc:kap:jrefec:v:30:y:2005:i:4:p:429-445
    DOI: 10.1007/s11146-005-7015-5
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    References listed on IDEAS

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    1. Yongheng Deng & Joseph Gyourko, 1999. "103 Real Estate Ownership by Non-Real Estate Firms: The Impact on Firm Returns," Working Paper 8665, USC Lusk Center for Real Estate.
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    5. Yongheng Deng & Joseph Gyourko, "undated". "Real Estate Ownership by Non-Real Estate Firms: An Estimate of the Impact on Firm Returns," Zell/Lurie Center Working Papers 321, Wharton School Samuel Zell and Robert Lurie Real Estate Center, University of Pennsylvania.
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    Cited by:

    1. Ng, Joe Cho Yiu & Leung, Charles Ka Yui & Chan, Suikang, 2022. "Corporate Real Estate Holding and Stock Returns: International Evidence from Listed Companies," MPRA Paper 111691, University Library of Munich, Germany.
    2. Diego Salzman, 2013. "Behavioural Real Estate," ERES eres2013_334, European Real Estate Society (ERES).
    3. Maarten Jennen & Patrick Verwijmeren, 2010. "Agglomeration Effects and Financial Performance," Urban Studies, Urban Studies Journal Limited, vol. 47(12), pages 2683-2703, November.
    4. Shi Ming Yu & Kim Hiang Liow, 2009. "Do retail firms benefit from real estate ownership?," Journal of Property Research, Taylor & Francis Journals, vol. 26(1), pages 25-60, February.
    5. Hail Jung & Sanghak Choi & Junyoup Lee & Sanggeum Woo, 2022. "Corporate pledgeable asset ownership and stock price crash risk," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 8(1), pages 1-28, December.
    6. Takanori Fukushima & Nobuyuki Isagawa & Tomohiro Mae & Satoru Yamaguchi & Takashi Yamasaki, 2013. "Corporate Real Estate Holdings: Fool' s Gold or Crown Jewel?," Discussion Papers 2013-03, Kobe University, Graduate School of Business Administration.
    7. Soyon Paek & Jin-Young Kim & Sung Gyun Mun & Chulhee Jun, 2021. "In hotel REITs, are institutional investors beneficial for firm value?," Tourism Economics, , vol. 27(4), pages 820-840, June.
    8. Hongyan Du & Yongkai Ma, 2012. "Corporate Real Estate, Capital Structure and Stock Performance: Evidence from China," International Real Estate Review, Global Social Science Institute, vol. 15(1), pages 107-126.
    9. Diego A. Salzman & Remco C.J. Zwinkels, 2013. "Behavioural Real Estate," Tinbergen Institute Discussion Papers 13-088/IV/DSF58, Tinbergen Institute.
    10. Joe Cho Yiu Ng & Charles Ka Yui Leung & Suikang Chen, 2024. "Corporate Real Estate Holding and Stock Returns: Testing Alternative Theories with International Listed Firms," The Journal of Real Estate Finance and Economics, Springer, vol. 68(1), pages 74-102, January.
    11. Rob Bauer & Piet Eichholtz & Nils Kok, 2010. "Corporate Governance and Performance: The REIT Effect," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 38(1), pages 1-29, March.
    12. 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, September.
    13. Julia Freybote & Lihong Qian, 2017. "Corporate real estate, stock market valuation and the reputational effects of eco-certification," Journal of Property Research, Taylor & Francis Journals, vol. 34(3), pages 163-180, July.
    14. Omokolade Akinsomi & Seow Eng Ong & Muhammad Faishal Ibrahim, 2013. "Corporate Real Estate Holdings and Firm Returns of Shariah Compliant Firms," ERES eres2013_99, European Real Estate Society (ERES).
    15. Julan Du & Charles Ka Yui Leung & Derek Chu, 2014. "Return Enhancing, Cash-rich or simply Empire-Building? An Empirical Investigation of Corporate Real Estate Holdings," International Real Estate Review, Global Social Science Institute, vol. 17(3), pages 301-357.

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