Value Creation and the Impact of Corporate Real Estate Assets

Ingrid Nappi-Choulet, Franck Missonier Cancel, Franck Missonier-Piera and Marion Cancel

ERES from European Real Estate Society (ERES)

Abstract: Managers should invest in assets (i.e. relevant profitable investments) that maximize the value of their firm. Recent trend shows that many large companies have sold or outsourced corporate real-estate assets. The underlying motives for such behaviour are yet to be examined (at least in a French context). If real-estate matters, we should observe an association between proxies of value creation and the change in real-estate assets within a company. This paper investigates the association between surrogates of EVA and MVA generated by French listed companies and the weight of real-estate in their assetsí portfolio. Using a pool sample composed of the SBF 250 companies ñ over the period 1999-2004 ñ our empirical results show that, an increase in the proportion of real-estate assets (over total assets) is negatively associated with EVA, but specifically for firms in the service industries exhibiting low real-estate intensity. The regressions on MVA show a negative association with the change in the real-estate for firms outside the service industries. Those results suggest the sales of real-estate assets can be driven by value maximizing behaviour.

JEL-codes: R3 (search for similar items in EconPapers)
Date: 2007-01-01
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Citations: View citations in EconPapers (2)

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