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Global Trends and Performance Effects in Corporate Real Estate

Working paper #473
Dirk Brounen and Piet Eichholtz

The authors explore trends and performance effects in corporate real estate ownership. Based on a sample of 4,636 companies from 18 industries and nine countries, the authors document that corporate ownership is driven by industrial rather than national differences, with corporate real estate ratios ranging between 0.13 for business services and 0.63 for the mining sector. Overall, real estate ownership appears to be decreasing over time, which may be due to the gaining popularity of lease alternatives. There is a significantly negative relationship between real estate ownership and a firm’s systematic risk. With respect to stock returns, results show that returns are generally lowest among firms with the highest real estate ownership levels in each industry, but the opposite is true for firms active in the hotel, retail, transportation and mining business.

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