Buy High, Sell Low: Corporate Investors in the Office Market

Real Estate Economics, Forthcoming

Posted: 22 Feb 2012

Date Written: February 21, 2012

Abstract

Commercial real estate transactions by corporations are matched with transactions of comparable assets by non-institutional 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 non-institutional 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.

Keywords: Corporations, Commercial Real Estate, Valuation, Options, Investment

Suggested Citation

Wiley, Jonathan A., Buy High, Sell Low: Corporate Investors in the Office Market (February 21, 2012). Real Estate Economics, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2008951

Jonathan A. Wiley (Contact Author)

Clemson University ( email )

101 Sikes Ave
Clemson, SC 29634
United States
864.656.4950 (Phone)

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