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Buy High, Sell Low: Corporate Investors in the Office Market
Author(s) -
Wiley Jonathan A.
Publication year - 2012
Publication title -
real estate economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.064
H-Index - 61
eISSN - 1540-6229
pISSN - 1080-8620
DOI - 10.1111/j.1540-6229.2012.00341.x
Subject(s) - divestment , valuation (finance) , real estate , business , monetary economics , market value , economics , finance
Commercial real estate transactions by corporations are matched with transactions of comparable assets by noninstitutional investors to evaluate outcomes resulting from corporate investment policy. Corporations invest in long‐term assets at a significant premium estimated relative to fundamental values. Divestiture is at a significant discount. Differences in operating performance fail to explain this outcome. Instead, corporate investors value commercial property differently than noninstitutional investors. Valuation differences contribute to overpayment during periods of expansion and liquidation during contraction. Corporate sellers also exhibit a high degree of impatience with significantly reduced marketing periods.