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Do retail firms benefit from real estate ownership?

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  • Shi Ming Yu
  • Kim Hiang Liow

Abstract

In this study, we investigate the role of real estate as a contributor to retailers’ corporate wealth. Employing a sample of 556 retail firms and data from 2001--2006, we first estimate and compare five popular stock market performance measures: median return, total risk, systematic risk, Sharpe Index and Jensen abnormal performance return index for the ‘composite’ and ‘business’ retail firms across three geographical regions and nine retail segments. Then we investigate if there is a statistically significant linear relationship between the relative property levels and incremental stock market performance measures. Overall, the results indicate that, although higher levels of real estate ownership are associated with better stock market performance, these incremental positive performance benefits are subject to diminishing return to scale. As retail firms do generally hold some form of real estate, these findings are significant for their strategic investment decisions.

Suggested Citation

  • 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.
    • Handle: RePEc:taf:jpropr:v:26:y:2009:i:1:p:25-60
    DOI: 10.1080/09599910903290003
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    References listed on IDEAS

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    1. 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.
    2. Kim Hiang Liow, 2004. "Corporate Real Estate and Stock Market Performance," The Journal of Real Estate Finance and Economics, Springer, vol. 29(1), pages 119-140, July.
    3. Brennan, Michael J, 1990. "Latent Assets," Journal of Finance, American Finance Association, vol. 45(3), pages 709-730, July.
    4. Fama, Eugene F & French, Kenneth R, 1992. "The Cross-Section of Expected Stock Returns," Journal of Finance, American Finance Association, vol. 47(2), pages 427-465, June.
    5. Ingrid Nappi-Choulet & Kim Hiang Liow, 2008. "A combined perspective of corporate real estate," Post-Print hal-00629226, HAL.
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    Cited by:

    1. Anil Kumar & Carles Vergara-Alert, 2018. "Does Corporate Real Estate Value Matter for Stock Returns?," ERES eres2018_251, European Real Estate Society (ERES).
    2. 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.
    3. David Ling & Andy Naranjo & Michael Ryngaert, 2012. "Real Estate Ownership, Leasing Intensity, and Value: Do Stock Returns Reflect a Firm’s Real Estate Holdings?," The Journal of Real Estate Finance and Economics, Springer, vol. 44(1), pages 184-202, January.

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