Stock market reaction to sale and leaseback announcements in the UK

Adams, Andrew; Clarke, Richard T.

doi:10.1080/095999196368862

Cited by 17 publications

(18 citation statements)

References 2 publications

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“…(1990), Rutherford (1990), Alvayay et al . (1995) and Fisher (2004) studied real estate sale and leasebacks and shareholder wealth in the USA and Adams and Clarke (1996) and Liow (1997) in the UK. However, there has not been any studies using more recent data or a sample of more than one hundred companies, and no studies of sale and leasebacks shareholder wealth have been made from the pan‐European market before to our knowledge.…”

Section: Introductionmentioning

confidence: 99%

“…Thus, the empirical evidence shows mostly evidence in favour of sale and leaseback transactions in the US market. Adams and Clarke (1996) extended the research of real estate sale and leasebacks and corporate value to the UK market by examining the stock market reaction to announcements of sale and leasebacks in the UK. Their results contradicted those from the USA showing that the share prices of the seller‐lessee corporations tended to fall on the announcement of a sale and leaseback transaction.…”

Section: Introductionmentioning

confidence: 99%

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Corporate Real Estate Sale and Leaseback Effect: Empirical Evidence from Europe

Grönlund¹,

Louko²,

Vaihekoski

2008

Euro Fin Management

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"Corporate real estate disposals have increased in Europe during the past few years. In this research paper, we study market reactions of publicly traded European companies' real estate sale and leaseback announcements during 1998-2004. This study is one of the first ones to study the sale and leaseback impact on corporate value with a pan-European data. We find that the sale and leaseback announcements have on average positive impact to firm's value which is in line with the previous studies. However, we also find that the positive effect is mainly caused by the deals with high transaction value to company market value ratio. Smaller transactions do not create on average any abnormal returns. Our results support the hypothesis that the positive sale and leaseback announcement effect is a consequence of revealed hidden value of the company's assets. Thus, sale and leaseback can also be seen as a mechanism for revealing the hidden value of company's assets to the market." Copyright (c) 2008 The Authors Journal compilation (c) 2008 Blackwell Publishing Ltd.

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Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Corporate Real Estate Sale and Leaseback Effect: Empirical Evidence from Europe

Grönlund¹,

Louko²,

Vaihekoski

2008

Euro Fin Management

View full text Add to dashboard Cite

show abstract

“…Adams and Clarke state that the sale-and-leaseback model can be traced back in the United Kingdom to the late 1920s and early 1930s, having been used there by a number of retailers to raise capital. The model's first large-scale use was in the United States, where it was first used in 1936 by Safeway Stores (Adams and Clarke, 1996). Here it was used for several supermarket premises.…”

Section: Sale-and-leasebackmentioning

confidence: 99%

“…In the United States property has been capable of depreciation for taxation purposes. This provided a large incentive for sale-and-leaseback deals in the United States, especially when marginal rates of taxation there were particularly high (Adams and Clarke, 1996). In contrast, property is not capable of depreciation for tax purposes in the United Kingdom.…”

Section: Taxationmentioning

confidence: 99%

Sale‐and‐leaseback as a British real estate model

Tipping¹,

Bullard

2007

Journal of Corporate Real Estate

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Many established trading companies have had considerable capital value locked into their operational properties. These properties have been identified as producing lower returns on invested capital than core business activities. Consequently, there has been a growing trend for the splitting of operational property from core business activity. In the United Kingdom, the hiving-off of operational property has most commonly taken the form of the sale-andleaseback model. This paper reviews the existing literature and some past transactions in order to identify the motivations of both operational businesses and property investors in adopting the model. Some transaction case studies are also highlighted. Accounting considerations had been a motive behind this trend. Recent reforms to accounting standards have offset that impetus. However, taxation considerations and the desire to release capital from real estate have continued to drive the model. The model has become increasingly popular in the United Kingdom during the past two decades. Originally the domain of those companies with especially strong covenants, it has more recently become much more widespread. The model has been a property strategy much favoured by 'blue chip' trading companies, including the principal British retail banks. More recently, high demand from investors has resulted in their acceptance of sale-and-leaseback transactions by trading companies with much weaker covenants. Some of these weaker covenants have since failed, leaving investors with investment properties diminished in value. This paper examines recent trends and seeks to identify how the sale-and-leaseback model may develop in the United Kingdom. Furthermore, the application of the model in the United Kingdom may give some insight into its application in other parts of the world, where it is either gaining further acceptance or may have greater potential application.

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“…Both examine the change in equity and bond prices immediately before and in the period after the announcement of the restructuring. Other authors 9 have used similar methods on more conventional sale and leaseback and corporate real estate decisions.…”

Section: Testing Market Impactsmentioning

confidence: 99%

Sale and leaseback, asset outsourcing and capital market impacts

Devaney

Lizieri

2004

Journal of Corp Real Estate

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Structured sale and leasebacks and corporate property asset outsourcing are often claimed to have benefits that seem to be inconsistent with financial theory. Eight such UK deals are analysed to investigate the impact on corporate value. The results show that impacts are 1 contingenton the capital structure of the firm, on the use of the capital raised and on market attitudes towards management and the sector. Two apparently similar deals can have quite different outcomes: benefits to shareholders and bondholders cannot be simply assumed.

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Stock market reaction to sale and leaseback announcements in the UK

Cited by 17 publications

References 2 publications

Corporate Real Estate Sale and Leaseback Effect: Empirical Evidence from Europe

Corporate Real Estate Sale and Leaseback Effect: Empirical Evidence from Europe

Sale‐and‐leaseback as a British real estate model

Sale and leaseback, asset outsourcing and capital market impacts

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