Shuffling Through the Bargain Bin: Real Estate Holdings of Public Firms

52 Pages Posted: 23 Dec 2015 Last revised: 15 Jun 2019

See all articles by Irem Demirci

Irem Demirci

Nova School of Business and Economics

Umit Gurun

University of Texas at Dallas

Erkan Yönder

John Molson School of Business, Concordia University

Date Written: May 20, 2019

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: Bank loan, collateral discount, real estate transactions, foreign demand

JEL Classification: G32, G33, R33

Suggested Citation

Demirci, Irem and Gurun, Umit and Yönder, Erkan, Shuffling Through the Bargain Bin: Real Estate Holdings of Public Firms (May 20, 2019). Available at SSRN: https://ssrn.com/abstract=2707617 or http://dx.doi.org/10.2139/ssrn.2707617

Irem Demirci

Nova School of Business and Economics ( email )

Lisbon
Portugal

Umit Gurun (Contact Author)

University of Texas at Dallas ( email )

2601 North Floyd Road
Richardson, TX 75083
United States

HOME PAGE: http://www.umitgurun.com

Erkan Yönder

John Molson School of Business, Concordia University ( email )

Montreal
Canada

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