Equity Versus Asset Acquisitions in the REIT Industry

42 Pages Posted: 13 Sep 2016 Last revised: 27 Feb 2019

See all articles by Daniel Huerta

Daniel Huerta

Florida Gulf Coast University

Thanh Ngoc Ngo

East Carolina University

Mark Pyles

College of Charleston

Date Written: June 12, 2016

Abstract

We examine the differing influences of equity and asset acquisitions in Real Estate Investment Trusts (REITs) considering the prevalence of REIT asset acquisitions as frequent and major investment decisions. We examine the impact of asset purchase announcements on market returns, operating performance, and dividend payout. Our results suggest that asset acquisitions are better for the acquiring firm than equity acquisitions. Specifically, we find that equity acquisitions result in significantly negative market reactions, where asset acquisitions do not. Both equity and asset acquisitions have a negative influence on operating performance; however, the effect is significantly less for asset acquisitions.

Keywords: REITs; acquisitions; asset purchases; operating performance

JEL Classification: G30, G32, G34, G39

Suggested Citation

Huerta, Daniel and Ngo, Thanh Ngoc and Pyles, Mark, Equity Versus Asset Acquisitions in the REIT Industry (June 12, 2016). Available at SSRN: https://ssrn.com/abstract=2837789 or http://dx.doi.org/10.2139/ssrn.2837789

Daniel Huerta (Contact Author)

Florida Gulf Coast University ( email )

10485 FGCU Blvd S
Ft. Myers, FL 33965-6565
United States

Thanh Ngoc Ngo

East Carolina University

Greenville, NC 27858
United States

Mark Pyles

College of Charleston ( email )

66 George Street
Charleston, SC 29424
United States

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