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The performance of REIT acquirers in the post-merger period
journal contribution
posted on 2018-01-01, 00:00 authored by Christopher RatcliffeChristopher Ratcliffe, Bill Dimovski, Monica KeneleyMonica KeneleyMergers and acquisitions are a feature of modern economies. However, research on conventional bidding firms in mergers and acquisitions (M&As) has shown, on average, shareholders are worse off in the long-run (Alexandridis, Mavrovitis and Travlos, 2012). This study examines the long-term post merger performance of US Equity Real Estate Investment Trusts (REITs) to see if this under-performance extends to the largest REIT sector in the world. In contrast to the earlier REIT data samples used by Campbell, Giambona and Sirmans (2009), we find, prior to the macroeconomic event of the financial crisis, that existing shareholders of bidding firms earn significant and positive abnormal returns. This outcome supports the synergy motive for M&As in the REIT sector. Results from announcements occurring after the onset of the financial crisis show signs of negative and significant abnormal returns, suggesting these M&As were driven by the agency and/or hubris motive.
History
Journal
Journal of real estate portfolio managementVolume
24Issue
2Pagination
107 - 120Publisher
American Real Estate SocietyLocation
Clemson, S.C.ISSN
1083-5547Language
engPublication classification
C Journal article; C1 Refereed article in a scholarly journalCopyright notice
2017, American Real Estate SocietyUsage metrics
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