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Title: Property policy, property asset values and share prices for property intensive companies
Author: Liow, Kim H.
Awarding Body: University of Manchester
Current Institution: University of Manchester
Date of Award: 1994
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This research explores several issues and problems associated with the perception of corporate property assets held by stock market investors. Our primary aim is to examine whether the market views property as an important corporate asset from the perspectives of valuation and strategy. For most non-property companies, property has been treated and managed merely as a factor of production with little judgement about how it is expensed or valued - often it is carried in the balance sheet for a fraction of its current market value. Further, its role in the corporate financial statements has not been understood. Given that property is a sizable asset in the balance sheets of some non-property companies, and that there are possibly two (distinct) markets at work - one for property and one for corporate equities, our concern is whether property is valued by the stock market on a different basis from its market value and whether the book value of property in company accounts differs sufficiently from either valuation to allow profitable intervention, through change in control, revaluation, acquisition and disposal or refinancing. From the strategy viewpoint, the existence of a strategy for the property market can help "property-intensive" companies arbitrage the difference between property asset value and share price. This is operationalised through various types of incremental property investment/divestiture which alter the property asset intensity of the companies. Our investigation is mainly concerned with detecting any significant abnormal return consequences in respect of revisions in property asset intensity through acquisitions, disposals and revaluations and their financial implications. 13 Our evidence appears to suggest that property asset intensity is an important factor in corporate financial management. In particular, it can significantly affect the corporate financial structure and risk-return perfonnance of "property-intensive" companies. Since its importance has not been fully reflected in current share price through property valuation, there are opportunities for retailers and other "property-intensive" companies to earn higher positive abnonnal returns and raise the stock market's valuation of their properties through incremental transactions in the property market. We further discover that the decisions of retailers to acquire/dispose of properties and their choice of valuation base for property can be partially influenced by the prevailing financial conditions of the companies. This further suggests that the intensity value of property has a role to play in corporate financial strategy. Finally, our strategic property valuation framework fonnalises the arbitrage relationship between property asset values and company share prices in the context of core business and explores profitable strategies for retailers to pursue in the property market. We do not pretend to answer all the questions raised. Within the sphere of Corporate real estate management, the methods and evidence reported in this research can be the basis for further study in the empirical literature related to the synthesis of property and fmancial asset" valuation and management in the UK corporate environment.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available