Abstracts for Vol.
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Donald G. Christensen and Donald R. Levi Corporate real estate assets have long been thought to be undervalued by firm managers. Finance research has provided evidence that if assets are separated from the firm for financing purposes, revaluation occurs and parent firms experience a positive share price response. The study provides evidence that parent firms creating non-real estate MLPs experience a positive, sustained increase in wealth while firms forming real estate MLPs experience no significant wealth impact. The conclusions are that commercial mortgages have been and continue to be efficiency priced, and that mortgages are similar in risk and expected return to lower rated investment-grade corporate bonds. Despite the large-scale purchase of U.S. real estate by foreign investors, empirical evidence has recently been offered that suggests that such investments may not be efficient for portfolio optimization.