The pricing of corporate real estate holdings on the UK capital market

Purpose The purpose of this study is to find out if corporate real estate ownership is priced into the capital market performance of non-property companies in the UK. This is of particular interest because ownership still represents a significant weight on the balance sheets and is predominantly considered unfavourable due to its bulkiness and difficult revisability in the event of changes in space demand. This draws attention to the UK as one of the most important European economies that have been exposed to strong uncertainties and dynamics, for example, due to the withdrawal voting of the United Kingdom from the European Union (BREXIT). Design/methodology/approach A first look at the real estate assets reported in balance sheets provides insight into possible changes in ownership strategy. This serves as a basis for subdividing companies based on their real estate assets using a portfolio-based approach and that are then analysed using the Fama and French multi-factor model with regard to their influence on capital market returns. Findings In general, the share of real estate assets has fallen over the past 10 years, although coinciding with BREXIT voting, some industries such as manufacturing show a turnaround. At the same time, ownership is priced in as a factor on the capital market, which applies to a sample across industries, as well as to separately considered sectors in the manufacturing and service industries. The pricing also shows a counter-cyclical pattern. Practical implications Corporate real estate management should be aware of the negative influence of ownership, especially against the background of economic fluctuations. The reduction of ownership can reduce the associated cost of capital and increase company success. Originality/value Previous UK-related studies mostly refer to a period before the global economic crisis in 2008, and therefore, are too old to reflect a changed view on corporate real estate ownership because of new corporate environmental conditions, based on inaccurate proxies or mainly refer to the retail segment. This research gap is closed.

An Analytical view of the Extent to which the Tax Accounting Process Conforms to the Transfer of Property Ownership in Accordance with Resolution 120 of 2002 with the Tax Rules

The tax on the transfer of real estate ownership is one of the taxes that were applied in Iraq after the year 2002 according to Resolution No. 120 of 2002. This was due to the problems that faced the work of the General Tax Authority in the process of accounting for transactions of transferring ownership of the property according to the previous mechanism of this decision. The tax accounting, according to this decision, is with the well-known tax rules because the compatibility between the tax accounting process on transferring the ownership of the property and the tax rules will lead to implant confidence between the taxpayer and the tax administration. The taxpayer's would not feel complacency and lack of unfairness when there is tax justice and clarity in the tax accounting process. Thus, this leads to avoid the problems that may occur Between the two parties to the tax accounting process. A number of applied cases are studied in Al-Mahmoudiya branch, one of the branches of the General Tax Authority. These studies are to demonstrate the extent of compatibility between the tax accounting for transferring ownership of the property with the tax rules. The research has come out with a set of conclusions, including that this type of tax does not comply with some tax rules. It is not consistent with the principle of justice, since the taxpayer who sells a share of his property bears more tax than it is. Also, it does not comply with the rule of certainty because the taxpayer does not have sufficient information about his complex tax accounting mechanism, since most of the taxpayers do not have tax awareness and are ignorant of the tax laws. It is consistent with the rule of convenience because the taxpayer will pay its amount after receiving the amount of the property that he sold or disposed of, and it corresponds to the rule of economy as it does not cost the tax administration high costs when collected. The taxpayer is the one who is forced to pay it when completing his transaction to sell his property. The research has reached a set of recommendations that could enhance the effectiveness of the tax calculation process on property transfer transactions and its compatibility with tax rules.

Corporate real estate ownership, cash and credit ratings

PurposeRecently, multiple examples of large firms acquiring real estate have polarized investors. Who are the firms investing in real estate and what are their characteristics? How does this investment in owning commercial real estate relate to cash holding policies? Is owning commercial real estate associated with better credit ratings? This study questions commonly held beliefs in finance that firms prefer to lease their real estate rather than own it and examines what are the differences in outcomes between the choices.Design/methodology/approachThe authors identify three testable hypotheses based on the research questions and prior literature. The authors use univariate and multivariate analyses to test these hypotheses along with thorough robustness and addressing of endogeneity issues to confirm that our results hold in a variety of settings. The authors employ new proxies of real estate to the literature from Bloomberg and firm level data from Compustat.FindingsThe authors show that more firms within the S&P 500 choose to own commercial real estate. The authors also find many significant differences in corporate characteristics between firms who own real estate and those who do not, such that firms with real estate ownership have significantly: higher growth opportunities, higher R&D expenses, higher working capital levels, lower capital expenditures, higher leverage and higher cash flow. Firms with corporate real estate (CRE) ownership hold less cash. Contingent on real estate ownership, firms have higher cash holdings as their real estate holdings increase. Last, firms with commercial real estate ownership have higher credit ratings.Originality/valueOne of the main contributions of this study is in the use of a new specific proxy using data on corporate land, buildings and construction in progress, which to the best of our knowledge has not been done in the past. Other studies focus on aggregate property, plant and equipment data which blurs the CRE ownership picture. Additionally, the authors provide an underexplored variable of CRE ownership to its impacts of cash holdings and credit ratings, which had yet to be uncovered.

Clientele Effects for Corporate Investors in the Industrial Market

Corporate investors pay significantly higher prices for industrial acquisitions (by an estimated 10%), but sell at market prices that are no different from other investors. The findings implicate informational disadvantages since it is only inexperienced corporations who overpay. Overpayment is more severe for high-quality assets and those sought after by users. Prices are significantly higher when both buyer and seller are corporate investors, indicating different approaches to valuation. Inclusiveness of the control group is an important caveat when measuring clientele effects. Overall, this study contributes to our understanding of investor clientele effects in the market for commercial real estate ownership.

Real estate ownership and life satisfaction in transition countries

Purpose The purpose of this study is to test the hypothesis that real estate ownership contributes to life satisfaction in transition countries. Design/methodology/approach Life in Transition survey data are used to model reported life satisfaction using ordinary least squares, ordered probit, generalized ordered logit and bivariate probit models. The hypothesis tested is whether real estate ownership is associated with greater reported life satisfaction. Findings Empirical results from the variety of empirical models estimated strongly support the hypothesis that real estate ownership is associated with greater reported life satisfaction in transition countries. Research limitations/implications Analysis is limited because life satisfaction is self-reported and specifically for residents of transition countries. Practical implications Results confirm that ownership of a home, second home or land parcel is associated with greater life satisfaction. Social implications Real estate ownership can be an effective means to improve life satisfaction, especially in societies needing such improvements. Originality/value This is the first study of the link between real estate ownership and life satisfaction specifically in transition countries, and using a robust set of empirical models to address issues of ordinal dependent variables, varying coefficient estimates across dependent variable response categories, endogeneity and causality.