The Separation of Real Estate Operations By Spin-Off

Authors: Hite G.L.¹; Owers J.E.²; Rogers R.C.³

Source: Real Estate Economics, Volume 12, Number 3, September 1984 , pp. 318-332(15)

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Abstract:

In this paper, we consider spin-offs as a vehicle to separate real estate operations from other real estate and/or non-real estate operations. For a sample of 33 such spin-offs announced and completed between 1962 and 1982, we document significantly positive abnormal returns around spin-off announcements. Using the standard event-time methodology, we find average excess returns of 5.7% in the two-day interval surrounding the first Wall Street Journal report of a pending spin-off. While the gains associated with spin-offs by real estate firms are positive on average, they are small in comparison to the 9.1% two-day announcement period abnormal returns surrounding proposals by non-real estate firms to divest real estate operations.

Document Type: Research article

DOI: http://dx.doi.org/10.1111/1540-6229.00325

Affiliations: 1: Edwin L. Cox School of Business, Southern Methodist University, Dallas, Texas 75275. 2: School of Business, University of Massachusetts, Amherst, Massachusetts 01003. 3: School of Business, University of Connecticut, Storrs, Connecticut 06268.

Publication date: 1984-09-01