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Article Information:
Title:
Sources of net present value gains in the acquisitions of corporate real estate
Author(s):
Ting Kien Hwa
Journal:
Journal of Corporate Real Estate
Year:
2008
Volume:
Issue:
Page:
121 - 129
ISSN:
1463-001X
DOI:
10.1108/14630010810905624
Publisher:
Emerald Group Publishing Limited
Document Access:
Abstract:
Purpose – Acquisitions of properties are carried out by corporate firms for development, investment and operational uses. Acquisitions of corporate real estate announced by listed non-property companies are found to have positive stock price reactions. This paper seeks to identify the reasons why acquisitions of corporate real estate are a positive net present value (NPV) investment to the acquiring firms.
Design/methodology/approach – This paper draws theoretical explanations from real estate and finance literature to identify the reasons for the acquisitions to be positive NPV investments to non-property listed companies.
Findings – The sources of gains in property acquisitions are worth, marriage value and business synergy. These explanations provide the reasons why the announcement of property acquisitions by listed companies could lead to positive wealth gains in the capital market.
Originality/value – This paper offers the explanations behind the positive stock price reactions upon the announcements of corporate real estate acquisitions.
Keywords:
Corporate strategy, Net present value, Property management, Real estate
Article Type:
Conceptual paper