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Working Papers

Corporate Real Estate Management

Working paper #370
Peter J.M.M. Krumm and Peter Linneman

Space is one of the largest expenses within an organization; land and buildings are a considerable item on corporate balance sheets. European corporations have been slow to realize that real estate assets contribute to their financial performance. European managers of corporate real estate should be aware of the impact of corporate real estate on shareholder value. The fact is that corporate real estate in Europe is greater than the total European real estate investment portfolio. Further, the average return on a real estate investment portfolio is notably lower than the return of corporations at large. A great deal of capital is locked-up in corporate real estate assets. But because it is not part of the core business, corporate real estate contributions are mostly considered to be of little interest. Most real estate managers, investors and consultants still focus on financial and operational issues unless a corporation is in financial distress. Linking real estate and corporate finance, on an on-going basis, is essential in determining the overall performance and success of managing corporate real estate.

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