Shuffling through the Bargain Bin: Real-Estate Holdings of Public Firms*

Irem Demirci, Umit G Gurun and Erkan Yönder

Review of Finance, 2020, vol. 24, issue 3, 647-675

Abstract: Constructing a novel database on the real-estate holdings of public firms, we show that distressed firms sell their real-estate assets at a discount relative to healthy firms. We find that distress discount in real-estate assets is less pronounced for sellers with less liquidity-constrained industry peers and in machinery-heavy industries. We also document that asset redeployability and the availability of potential buyers are two important property-specific determinants of the distress discount. Additionally, firms’ property portfolios that are less redeployable with less potential buyers exacerbate the negative impact of financial distress on the cost of borrowing.

Keywords: Collateral discount; Financial distress; Commercial real estate; Redeployability; Loan pricing (search for similar items in EconPapers)
JEL-codes: G32 G33 R33 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (4)

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