Facility Sustainment and Firm Value: A Case Study Based on Target Corporation

Robert Beach

Journal of Sustainable Real Estate, 2011, vol. 3, issue 1, 232-253

Abstract: This paper argues that increasing the level of facility sustainment (maintenance and repair) funding can increase firm value. Higher levels of facility sustainment funding reduce the list of maintenance and repair projects and maintain the liquidation value of the firm's facilities. A condition is derived that establishes the minimum probability of financial distress required for firm value to increase as sustainment funding increases. This condition is tested with a case study based on the annual reports of a major retailer, Target Corporation. The results support the hypothesis. This holds even though adverse externalities that might occur from underfunding sustainment have not been considered.

Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:taf:rsrexx:v:3:y:2011:i:1:p:232-253

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DOI: 10.1080/10835547.2011.12091816

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