Sale-Leaseback Transactions: Price Premiums and Market Efficiency

C. Sirmans and Barrett Slade

Journal of Real Estate Research, 2010, vol. 32, issue 2, 221-242

Abstract: Sale-leaseback transactions are ubiquitous in real estate markets in the United States with annual volume estimated to be greater than $7 billion. However, there is no evidence concerning the price impact of such transactional arrangements. Using a data set of sale-leaseback transactions, this study examines the price impact on commercial property transactions across seven markets. The findings reveal that transactions structured as sale-leasebacks occur at significantly higher prices than market transactions. In addition, after accounting for income differentials, buyers and sellers are appropriately pricing the transactions resulting in no undue advantage to either party, that is, the expected price premium is accounted for in the sale-leaseback prices.

Date: 2010
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DOI: 10.1080/10835547.2010.12091277

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