A Review and Extension of Merger and Acquisition Research between REITs and General Corporations
42 Pages Posted: 30 Mar 2018 Last revised: 26 Sep 2019
Date Written: March 25, 2018
This paper reviews the key differences between the finance and real estate literature on mergers and acquisitions (M&As) from 1980 to 2016. We summarize the differences in M&As between REITs and general corporations. First, REIT mergers are larger than general mergers. In particular, the bid levels of REITs are consistently higher than those of standard business mergers. Second, REIT acquisitions involve fewer all-stock bids and fewer all-cash deals. Third, the deal sizes with mixed payments are much higher than that with other payment methods. Fourth, there are very few number of hostile takeovers in the REIT market but the proportion of hostile takeovers in REITs does not differ from that in conventional firms. Fifth, the average deal value of REIT private-to-public takeovers is higher than that of public-to-public takeovers and the average deal value of REIT public-to-private takeovers is higher than that of private-to-private or other-private M&As. Finally, we would have suspected that research would have examined the use of umbrella-REITs that could help move real estate assets into better managed and use levels form. No study has looked at this issue as yet and this will provide fruitful research ideas in the future.
Suggested Citation: Suggested Citation