How different retail strategies affect shareholder value

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ACKNOWLEDGEMENT

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DECLARATION

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TABLE OF CONTENTS

ACKNOWLEDGEMENTII

DECLARATIONIII

CHAPTER 2: LITERATURE REVIEW1

2.1 Introduction1

2.2 Shareholder Wealth1

2.3 Sale and Leaseback2

2.4 Current picture5

2.5 Renting or Owning Real Estate6

2.6 Retail Strategy7

2.7 Modern real estate system7

2.8 Real estate and recession9

2.8.1 Cost Saving & Alternative Funding10

2.9 Division of cash flow and retail strategies11

2.10 Impact of leaseback12

2.10.1 The Weakness of the Slovin, Sushka and Polonchek Research16

2.11 The leasing Literature18

2.12 Motivations for Sale and leaseback transactions20

2.13 Theories of Wealth Effects21

2.13.1 Prior Empirical Evidence23

REFERENCES25

CHAPTER 2: LITERATURE REVIEW

2.1 Introduction

In many of these companies target, real estate comprises a substantial portion of total assets are recorded at historical cost balance sheet. In other words, these companies become acquisition targets by holding real estate assets that are not efficiently put to its highest and best use. Acquisitions can be seen as a mechanism by which the real estate market changes less efficient to more efficient uses (Shwartz 2007, 1396).

The importance of real estate retail strategy in the combined total assets of social balance was first studied by Howard Stevenson. He concluded that real estate is a critical area of corporate investment. However, is often an under-managed activity? In the early 1980s, many companies are aware of the importance of real estate assets, decided to actively manage their real estate (Shleifer 2009, 737). Some have done so by creating a separate unit of real estate companies in the corporate structure by restructuring a unit of power or by creating a separate unit of real property outside the corporate structure (Shleifer 2008, 1343).

2.2 Shareholder Wealth

Rutherford and Nourse examined the impact of the formation of a corporate real estate unit in the market value of the company. The study investigated the economic impact of restructuring activities regardless of the specific type of divestiture, but with respect to the organizational form of holding real estate. In general, it was found that the formation of a real estate unit produces abnormal excess returns for most companies (Leonhardt 2008, 2).

2.3 Sale and Leaseback

Safeway Stores first introduced the sale-leaseback (SLB) in 1936. Safeway used the technique for individual supermarkets and included a repurchase agreement. Since then, various financial institutions and corporations have sold and leased back their headquarters and other buildings or land to raise working capital, pay off debts, and to take advantage of the increased value of depreciated property (Kouparitsas 2006, 60).

Smith, C.F. have investigated the effect of corporate debt offerings and found that firms generally experience negative excess returns when announcing new debt issues. Copeland and Weston suggest that leasing and debt financing are perfect ...