REAL ESTATE MERGER MOTIVES: AN ANALYTICAL REVIEW OF THE LITERATURE

Randy I. Anderson
University of Central Florida Orlando and EBS Business School

Henrik Medla
EBS Business School

Nico B. Rottke
EBS Business School and University of Central Florida Orlando

Dirk Schiereck
Tech University Darmstadt and EBS Business School

Abstract This paper examines the dominant theories, motives, methodologies, and results of the existing literature on the rationale for real estate related mergers. The literature review draws on the mainstream corporate governance literature in nance as its base and highlights the differences in motives between real estate and non-real estate related merger activity. The studies highlight that the homogeneity of real estate rms, especially as they pertain to the highly regulated real estate investment trust (REIT) industry, is expected to reduce the availability of revenue and overall corporate synergies, but might allow for the ability of some rms to more readily be able to take advantage of scale efciencies. In addition to summarizing past studies, the review concludes with a discussion of the need for continued research in this evolving literature.

In the nance literature, there exists a plethora of studies that examine both theoretically and empirically the issues surrounding mergers and acquisitions (M&A).1 The traditional approach has been to examine, utilizing event study methodology, the wealth implications for the bidder and target rms. The same approach has also been predominantly applied on real estate related M&A studies. Womack (2012) is the rst to determine the combined rm returns for a sample spanning nearly three decades of real estate mergers. Prior real estate merger studies analyzed bidder and/or target returns but did not evaluate the combined wealth effects. Target returns were consistently found to be positive but relatively small compared to those evidenced in studies outside the real estate industry. Results concerning bidder returns are less conclusive and vary greatly depending on the analyzed time frame [i.e., before or after the Tax Reform Act of 1986 and/or the Real Estate Investment Trust (REIT) Modernization Act of 1999], as well as on the types of rms (i.e., REITs vs. all real estate rms, equity REITs vs. all REITs, public targets vs. private and public targets, etc.) studied in the individual sample of the studies. Most studies, however, show slightly negative returns to bidding rms around the merger announcement, at least for mergers with public targets.2 However, as depicted in Ling and Petrova (2011) and Anderson, Medla, Rottke, and Schiereck (2011), there are very few studies that assess why mergers in the real
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estate industry (or really any other market for that matter) occur. And, perhaps just as important, the current literature is largely inconclusive or at best inconsistent across studies and sectors, leaving many unanswered questions. The majority of studies attempting to determine the rationale behind mergers in the real estate industry mainly draw on ndings from studies analyzing merger motives outside the real estate industry. More recently, a number of studies build on the observation that hostile takeovers among real estate rms are extremely rare and use this as the motivation to exam why mergers then occur. The ndings that hostile takeovers among real estate rms are extremely rare, as well as the many other peculiarities of the real estate market, cast doubt on the assumption that the reasons for takeovers in the real estate industry are basically the same as for those outside the industry. Moreover, the role of synergies as a motive for mergers and acquisitions in the real estate industry and especially for REIT mergers is a particularly controversial question among academics and practitioners, even though the size-related benets in REITs are well documented in the literature.3 The common skepticism concerning the relevance and existence of synergies can mainly be ascribed to the observation that several studies measuring abnormal returns for bidding and target rms in real estate mergers document wealth effects of materially lower magnitude than those detected in studies for other sectors. The lower magnitude of returns is thereby regularly explained by the limited potential for synergistic gains from real estate mergers. Eichholtz and Kok (2008), for example, argue that the homogeneity of assets of real estate companies decreases the potential for synergistic prots emerging from merged operations. They also reason that the homogeneity of operations in real estate mergers does not allow for large value-creating synergies. Campbell, Ghosh, and Sirmans (2001) suggest that the required uniformity of REIT asset composition largely eliminates the potential for vertical integration synergies through mergers. In a recent study, Anderson, Medla, Rottke, and Schiereck (2011) show that the expected magnitude of total synergies for REIT mergers is lower than those found in other sectors. They, however, also nd that for the same homogeneity reasons, REITs are able to nd greater synergies than non-REIT rms on the operating cost side and, as such, can take considerable advantage of economies of scale. The results of their study therefore challenge the notion that synergies do not play a major role as a motive for REIT mergers. This paper provides a detailed review of the literature beginning with the theoretical background that motivates mergers, followed by a detailed discussion of the real estate focused studies. Studies that merely analyze wealth effects in real estate mergers are not covered here and the authors do not attempt to determine the rationale behind those takeovers, as those effects are already sufciently documented in a recent study by Womack (2012). The paper concludes with a brief summary and discussion of the need for additional research in this emerging literature. The main ndings suggest that it is rst and foremost important to study real estate mergers separately and distinctly from non-real estate related rms. This is even more relevant when dealing with publically traded REITs that have very specic regulatory guidelines. These guidelines tend to homogenize REITs making synergistic gains from

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mergers more difcult, while at the same time providing opportunities for readily available greater gains from economies of scale in operating costs.

THEORETICAL BACKGROUND

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MERGER MOTIVES

The motives for takeovers can be numerous and true verication is often ambiguous and/or impossible to fully ascertain. A reasonable and compelling differentiation between the diverse merger motives is to distinguish between neoclassical theories on the one hand and agency and behavioral theories on the other (Bernile and Bauguess, 2010). According to neoclassical theories, mergers occur mainly as a result of external shocks, either in the form of economic, technological, nancial, regulatory, or political shocks (Harford, 1999, 2005) and are made to sustain or create competitive advantages (Jensen, 1988). Mergers under the neoclassical perspective are mostly motivated by such shocks and are expected to lead to prot optimization and shareholder value creation, assuming managers are aligned with shareholders interests (Martynova and Renneboog, 2008). Following this logic, merged rms should be able to operate more efciently than the individual standalone entities through the realization of synergies. In contrast, agency and behavioral theories allow for the possibility that takeovers are value-destroying transactions. Inherent agency conicts between rms insiders and investors or biases affecting managers are thereby credited as motives to engage in M&A transactions (Jensen, 1986; Roll, 1986; Shleifer and Vishny, 1991; Berkovitch and Naryanan, 1993). According to those theories, managers may seek to build an empire through vast acquisitions while shareholders want the management to increase the value of the rm. According to Mueller (1969), management salaries, bonuses, stock options, and promotions tend to be more associated with corporate size than to the rms protability. Likewise, the power and prestige of managers are more associated with the growth and size of the rm than to its protability. Jensen (1986) also found that managers have an incentive to grow rms beyond their optimal size since their compensation is positively related to sales growth. Roll (1986) reasons that managerial hubris makes overcondent managers overestimate the creation of synergetic value, thereby tempting them to engage in value-destroying mergers. Another recently popular theory is market timing, whereby insiders attempt to exploit temporary market misvaluations (Rhodes-Kropf, Robinson, and Viswanathan, 2005; Dong, Hirshleifer, Richardson, and Teoh, 2006). The theory is based on Myers and Majluf (1984), who argue that managers take advantage of temporarily overvalued equity as cheap currency for acquiring real assets. Prior research reveals that none of those theories are mutually exclusive; meaning those rms and their insiders may simultaneously have more than one motive when engaging in takeovers (Berkovitch and Narayanan, 1993). The empirical evidence also indicates that no single theory can fully explain the occurrence of M&A activity and the pattern of takeover waves. Martynova and Renneboog (2008) show in a comprehensive literature review on corporate takeovers of the last century that the most consistent nding regarding the reasons for takeovers is that they are motivated differently depending on the stage of the merger wave they are executed in, and that

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wealth effects also vary depending on whether they take place in the earlier or later part of a wave. The combined companies are thereby expected to create synergistic gains when the merger occurs in the rst half of a takeover wave. In contrast, the majority of value-destroying acquisitions take place in the second half of a wave. The same theories discussed above are commonly used to explain the occurrence of M&As among real estate rms. The real estate industry, however, exhibits unique aspects that cast doubt on whether this approach is reasonable and should be accepted without in-depth validation. The most relevant difference to other industries is the dominance of REITs in the real estate market.4 Those rms avoid the double taxation of typical corporations in exchange for meeting a strict list of ownership, asset, income, and dividend payout requirements.5 The strict rules REITs have to comply with in order to obtain and subsequently maintain their status should have an impact on the relevancy of the individual theories explaining takeover activity in the real estate industry. In this context, Allen and Sirmans (1987) propose that some classic corporate merger motives can be precluded for REITs due to their unique structure and their institutional environment. As an example, they point out that it is unlikely that a business combination of REITs would create any monopolistic power (p. 177), because the vast majority of REIT income must come from passive sources such as rents and mortgages. Moreover, other peculiarities of the real estate market, such as the coexistence of a large private market that competes directly against rms for the ownership of real estate assets, are also expected to have various implications. The fact that hostile takeovers among real estate rms are extremely rare also casts doubt on the assumption that the reasons for takeovers in the real estate industry are basically the same than for those outside the industry and that the market for corporate control works in essentially the same way (Eichholtz and Kok, 2008; Womack, 2012).

LITERATURE REVIEW

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REAL ESTATE MERGER MOTIVE STUDIES

The latest relevant research on real estate mergers mainly builds on the almost entire absence of hostile takeovers among real estate rms.6 In this context, Womack (2012, p. 2) raises these questions: Does the above [i.e., the fact that hostile takeovers among real estate rms are extremely rare] imply that management of underperforming rms are not held accountable for their results? If not, then why do real estate mergers occur? In order to investigate why real estate mergers occur, he tests for three merger motives: the empire building hypothesis, the over-valued information signal hypothesis, and the inefcient management hypothesis. His results indicate that the motivation for real estate mergers is consistent with the inefcient management hypothesis. According to this hypothesis, rms with superior management acquire other rms that possess unexploited opportunities to cut costs and increase earnings. The study, however, only tests for three popular merger motives without taking into account other important potential motivations. The methodology used to test for the motives based solely on abnormal returns around the takeover announcement only allows for an analysis on the meta level without gaining detailed insights into the expected sources underlying real estate merger gains.
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Womacks (2012, p. 2) approach builds on the assumption that because each merger theory generates a testable hypothesis about the stock markets response to the news of a merger announcement, the returns for each of these rms collectively can be utilized to test which theory is best supported by the data. Following his argument, takeovers under the inefcient management hypothesis would generally be wealthcreating events. The hypothesis predicts the following abnormal returns: target (positive), bidder (non-negative), and combined rm (non-negative). The applied experimental design does not allow for controlling whether the inefcient management hypothesis is really the dominant theory that predicts this kind of announcement effect. The synergy hypothesis stating that merged rms should be able to operate more efciently than individual standalone entities by cutting redundant costs and additionally increasing earnings, for example, should lead to a similar capital market reaction. The inference of motivations underlying mergers based exclusively on the returns around the deal announcement does not enable consideration of the fact that there may be other theories that predict the same, or at least a very similar return pattern.7 Some of the other ndings that are used to support the inefcient management hypothesis may be driven by alternative explanations. Womacks results, for example, indicate that bidders typically do not seek geographical diversication. He ascribes this nding to the fact that effective managerial focus is more difcult when properties are widely spread apart. However, this result could be alternatively associated with bidders aims to generate material cost synergies, which is more likely to be accomplished in focused mergers where the bidder is located in the same state as the target and the potential for cutting redundant costs is consequently higher. Allen and Sirmans (1987) mention tax motivations (i.e., the purchase of operating losses to offset the acquiring REITs capital gains) and the opportunity to replace inefcient management as potential motives for REIT mergers. Only six out of the 31 events in their study with complete information involves one or the other trust having experienced an operating loss in a previous period. A differential means test between the two subsamples does also not reveal any signicant differences. They conclude that on the basis of these observations, tax motivations alone are not important motives in REIT combinations. However, they nd that related mergers (i.e., bidder and target are both equity/mortgage REITs and/or have the same property focus or geographic focus) yield statistically signicant higher abnormal returns around the announcement than unrelated combinations. They paraphrase this nding as evidence for the inefcient management hypothesis. An alternative explanation would yet be that synergies are likely to be higher for related business combinations. Elayan and Young (1994) extend Allen and Sirmans (1987) examination of the sources of gains to target shareholders. They note that in addition to improved asset management through a change in control, anticipated operational and nancial synergies may contribute to gains associated with a business combination (p. 169). In order to partition the gains from these two sources, they examine the wealth effects of both the targets and bidders when controlling (i.e., acquisitions that result in the bidders control of over 50% of the targets outstanding shares) and noncontrolling interests are sought. Their hypothesis builds on the assumption that while a gain based on synergies could be associated with either form of combination, a gain from a

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change in control would exclusively be associated with an acquisition of a controlling interest. Their results show that the signicant positive abnormal returns that accrue to target shareholders in both cases are signicantly larger when a controlling interest is sought and infer that this is consistent with the realization of greater efciency associated with a change in control (i.e., evidence for the inefcient management hypothesis). The authors bring a new approach into play and their ndings reveal interesting results. However, the underlying assumption in the study is that synergies can be (fully) realized in cases only when partial control is obtained in an acquisition is critical. Savings in many expense categories can only be realized if the two combining rms are in fact fully integrated. Savings in duplicative public company expenses, which can be expected to be substantial for the relatively small rms in Elayan and Youngs (1994) sample period from 1972 to 1987, can for example only be realized if both companies are fully integrated. Bradley, Desai, and Kim (1993), for example, use a threshold of 70% as a prerequisite for the generation of potential synergies in their study examining synergies across multiple industries. They base their selection of the 70% threshold on the fact that some corporate charters require a two-thirds or higher majority to effect a formal combination of two rms. Campbell, Gosh, and Sirmans (1998) infer, based on their nding of negative announcement returns of acquiring equity REITs, that hubris or self-dealing may be the rationale behind those mergers. They base this assessment purely on the observed wealth effect and do not further elaborate on their interpretation. Eichholtz and Kok (2008) supplement the existing studies by investigating 95 takeovers of property companies all over the world. Especially worth remarking is that they thereby measure bidder and target performance prior to the takeover announcement, which had not been done for real estate mergers before. To determine the effectiveness of the market for corporate control, they study the characteristics of targets and bidders compared to a control sample using a multinomial logistic approach. They nd that targets are mainly nancially underperforming, small target companies have a low market-to-book value, and that weak operating and stock performance of real estate companies are positively related to the likelihood of a takeover. The authors interpret this evidence as in line with the inefcient management hypothesis. Moreover, they compare their results between REIT takeovers and nonREIT takeovers, which are mainly takeovers involving non-U.S. entities, and nd that targets in non-REIT mergers have a signicantly negative coefcient for market-tobook value, whereas this result does not hold for REITs. Based on this nding for the subsample of REITs, one can see that the overall obtained results may not be representative for REIT M&A deals in general. Another notable exception to the wealth effect based merger motive studies is a recent paper by Ling and Petrova (2011). The authors identify the characteristics of publiclytraded REITs associated with an increased probability of being the target of an announced takeover. They also examine whether certain target characteristics inuence the probability of a bidder being a private versus a public rm. They nd that REITs that are more likely to become acquisition targets relative to the rest of public REITs
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are generally smaller and more cash restricted with relatively high dividend yields and institutional ownership and no umbrella operating partnership. The differences between the target rms in public-to-public versus going private acquisitions are also documented. More precisely, the authors deliver evidence that the targets of private acquirers have lower leverage, interest coverage ratios, and protability, but higher dividend yields. Their results therefore provide evidence for different motivations for private versus public acquirers. Private bidders tend to focus on prot maximization and hence are bidding on cash restricted, underlevered, and underperforming target REITs. Public bidders are eager to increase market power and are therefore more focused on acquiring protable and higher levered REITs with higher dividend yields. Their nding that in the case of acquisitions by private rms, but not by public rms, targets are typically underperforming with low leverage, deliver important insights into the merger motives of public real estate acquirers and shows that the inefcient management hypothesis does not seem to hold unrestrictedly for staying public mergers. Most of the recent studies by now focus on the inefcient management hypothesis to explain takeovers in the real estate industry, thereby mostly neglecting the neoclassical view that mergers indeed have the potential to create incremental value through the realization of synergies even in absence of inefcient management of targets. At the bottom line, a precise separation between gains from synergies on the one hand and from those from the replacement of inefcient management on the other does not seem to be always possible. Whether gains simply stem from cutting previously aboveaverage expenses at the target level or real incremental gains (i.e., synergies) are in fact generated by the combination of two previously independent entities cannot always be evaluated from an outsiders perspective. Even in those mergers where the management of the bidding rm explicitly forecasts the synergies expected from the merger, the management could, for example, include cost savings in their forecasts that also would have been realized without a merger, thereby inating merger-related synergistic gains.8 Both sources of merger gains, however, on balance lead to more efcient operations of the combined entities. The potential complications with differentiating between the gains from the two sources should therefore not lead to serious concerns as they both have very similar effects on the performance of the newly combined rms. From an academic perspective, a precise separation is nevertheless of interest, since the ndings can have important implications for academics, as well as for practitioners engaged in the eld of real estate M&A. Anderson, Medla, Rottke, and Schiereck (2011) attempt to distinguish between the gains from the two different sources whenever the data and applied methodology allow. The authors provide some insights into why REIT mergers occur by analyzing hand-collected synergy forecasts provided by merging rms insiders for a sample of merger announcements where the bidder is a publically-traded REIT in the U.S. The neoclassical view that characterizes mergers as rms rational, efciency-enhancing reaction to a changing environment is thereby a priori accepted as the dominant theory. The approach to focus on synergies as a merger motive has the advantage that evidence for, but also against synergies as motive can be interpreted twofold. This means that if there is no evidence for potential synergies in the takeover, other motives

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must have been the decision criterion. They hypothesize that expected synergies are in fact an important merger motive for REITs and therefore expect that synergies are quoted and quantied more often in REIT mergers than in mergers in the rest of the corporate world. Their nding that management forecasts of synergies are publicly available in 35% of the REIT mergers in their sample and therefore for a materially higher proportion of deals than evidenced in other studies analyzing synergy forecasts in samples across multiple industries supports their contention. However, the available sample size is quite small and thus limits the robustness of the ndings. Anderson, Medla, Rottke, and Schiereck (2011) also investigate the determinants of insiders forecasts of synergies and thereby attempt to explain the variation in the estimated present value of synergies using the variables that are predicted to inuence those values. The results of their cross-sectional analyses using OLS regressions show that the factors suggested by the literature to proxy for the potential existence of synergies explain a considerable share of the variation in the estimated present value of synergies. Managerial synergy forecasts in REIT mergers therefore seem to be economically signicant and profound. The results are consistent with more general ndings on economies of scale in REITs, demonstrating that general and administrative (G&A) expenses and to a lesser extent also interest expenses are the most relevant sources for cost savings. The results of the study also provide additional insights into the synergy motivation; however, the experimental design is not set-up to allow for a comprehensive controlling for the potential existence of alternative theories. The potential (co-)existence of agency and/or behavioral theory based motivations consequently cannot be assessed.

CONCLUSION
This paper reviews the dominant theories, motives, methodologies, and results of the existing literature on the rationale for real estate related mergers. The theoretical background that motivates mergers is presented and neoclassical theories and behavioral theories thereby discussed, followed by a detailed discussion of the real estate focused studies. The literature review thereby draws on the mainstream corporate governance literature in nance as its base and highlights the differences in motives between real estate and non-real estate related merger activity. The ndings show that the existing literature is largely inconclusive, leaving many unanswered questions. The majority of studies attempting to determine the rationale behind mergers in the real estate industry mainly draw on ndings from studies analyzing merger motives outside the real estate industry. More recently, a number of studies build on the observation that hostile takeovers among real estate rms are extremely rare and therefore focus on the inefcient management hypothesis to explain takeovers in the real estate industry. The focus on the inefcient management hypothesis to explain takeovers in the real estate industry, however, neglects the neoclassical view that mergers indeed have the potential to create incremental value through the realization of synergies even in absence of inefcient management of targets. The past studies also highlight that the homogeneity of real estate rms, especially as they pertain to the highly regulated REIT industry, is expected to reduce the availability
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of revenue and overall corporate synergies, but might allow for the ability of some rms to more readily be able to take advantage of scale efciencies. Future research should ascribe a higher importance to the role of synergies as rationale to engage in real estate mergers, taking into account the unique characteristics of the industry and in particular those that the REIT structure inevitably brings along. Synergies are recognized as a central merger motive in the general nance literature but have been largely overlooked in real estate M&A research for the sake of focusing on the inefcient management theory to explain the almost entire absence of hostile takeovers among real estate rms. Looking forward, the currently rising number of takeovers in the real estate industry will allow for analyses in the near future not possible to date due to an insufcient number of observations and time periods that are too short. Finance studies show that the patterns of takeover activity vary signicantly across takeover waves, with different motives being the dominant rationale to merge in each wave. Even though the real estate M&A market exhibits the same cyclical wave pattern, this aspect has not been further analyzed to date. It will be interesting to see whether the motives differ in the earlier years of the REIT industry compared to those in the modern REIT era. Potential events that can be expected to have had an impact on the dominant reasons to merge are the Tax Reform Act of 1986 (REITs no longer were required to have external management), the establishment of the look-through provision in 1993 (allowance concerning the ve or fewer rule of REITs with regard to the number of investors represented by a pension or mutual fund), and the REIT Modernization Act of 1999 (relaxed restrictions on the ancillary businesses that REITs could be engaged in to some extent).

ENDNOTES
1. The terms takeover, merger, acquisition, and M&A are used interchangeably throughout this paper. 2. Please refer to Womack (2012) for a comprehensive review of the literature on the wealth effects of real estate related mergers and acquisitions. 3. See Anderson, Lewis, and Springer (2000) for a literature review on the operating efciencies in real estate. 4. Real estate rms not structured as REITs, also known as real estate operating companies (REOCs), are not constrained by these regulations and are similar in most aspects to rms outside of the real estate industry. Their relevance for the publicly-listed real estate market in the U.S. is rather small in comparison to REITs. 5. See, for example, Allen and Sirmans (1987) for a summary of the key provisions a REIT must meet to be qualied. Please also refer to Feng, Price, and Sirmans (2011) for a comprehensive documentation of the publicly-traded equity REIT universe. 6. Allen and Sirmans (1987) nd that only one event in their sample of 38 REIT mergers could be classied as a hostile takeover. Campbell, Gosh, and Sirmans (1998) nd no single successful hostile takeover in the 27 transactions studied. Campbell, Gosh, and Sirmans (2001) also nd none in their sample of 85 REIT mergers. Eichholtz and Kok (2008) investigate 95 takeovers of property companies all over the world and nd that only two are hostile. Womack (2012) nds that only 1 out of the 94 mergers of public real estate rms studied can be classied as a hostile takeover.

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7. The synergy theory is not controlled for in Womacks (2012) study. Berkovitch and Narayanan (1993) use a similar research design to test for three merger theories in the regular corporate world (synergy, agency, and hubris). They additionally design a formal test to distinguish between agency and hubris motives for takeovers, thereby allowing for the potential coexistence of more than one theory, by analyzing the correlations between target, bidder, and total gains. 8. Houston, James, and Ryngaert (2001) point out this complication in their study of large U.S. bank mergers and explicitly name one merger for which security analysts note that a material fraction of the forecasted cost savings is attributable to a cost-cutting program already under way. The authors also note that it is not clear whether management is unaware of the biased nature of the forecasts and conclude that these tendencies do on balance tend to exaggerate the valuation estimates used in their paper.

REFERENCES
Allen, P., and C.F. Sirmans. An Analysis of Gains to Acquiring Firms Shareholders: The Special Case of REITs. Journal of Financial Economics, 1987, 18, 17584. Anderson, R.I., D. Lewis, and T.M. Springer. Operating Efciencies in Real Estate: A Critical Review of the Literature. Journal of Real Estate Literature, 2000, 8:1, 320. Anderson, R.I., H. Medla, N.B. Rottke, and D. Schiereck. Why Do REIT Mergers Take Place? Evidence from Synergistic Forecasts. Working Paper, EBS Business School, 2011. Berkovitch, E. and M.P. Narayanan. Motives for Takeovers: An Empirical Investigation. Journal of Financial and Quantitative Analysis, 1993, 28:3, 34762. Bernile, G. and S.W. Bauguess. Do Merger Synergies Exist? Working Paper, University of Miami. Available at SSRN: http: / / ssrn.com / abstract642322. 2010. Bradley, M., A. Desai, and E.H. Kim. The Rationale behind Interrm Tender Offers: Information or Synergy? Journal of Financial Economics, 1983, 21:1, 340. Campbell, R.D., C. Ghosh, and C.F. Sirmans. The Great REIT Consolidation: Fact or Fancy? Real Estate Finance, 1998, 15:2, 4554. . The Information Content of Method of Payment in Mergers: Evidence from Real Estate Investment Trusts (REITs). Real Estate Economics, 2001, 29, 36087. Dong, M., D. Hirshleifer, S. Richardson, and S.H. Teoh. Does Investor Misvaluation Drive the Takeover Market? Journal of Finance, 2006, 61:2, 72562. Eichholtz, P.M.A. and N. Kok. How Does the Market for Corporate Control Function for Property Companies? Journal of Real Estate Finance and Economics, 2008, 36:2, 14163. Elayan, F.A. and P.J. Young. The Value of Control: Evidence from Full and Partial Acquisitions in the Real Estate Industry. Journal of Real Estate Finance and Economics, 1994, 8, 16782. Feng, Z., S.M. Price, and C.F. Sirmans. An Overview of Equity Real Estate Investment Trusts (REITs): 19932009. Journal of Real Estate Literature, 2011, 19:2, 30743. Harford, J. Corporate Cash Reserves and Acquisitions. Journal of Finance, 1999, 54:6, 1969 97. . What Drives Merger Waves? Journal of Financial Economics, 2005, 77:3, 52960. Houston, J., C. James, and M. Ryngaert. Where Do Merger Gains Come From? Bank Mergers from the Perspective of Insiders and Outsiders. Journal of Financial Economics, 2001, 60, 285 331. Jensen, M.C. Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers. American Economic Review, 1986, 76:2, 32329.

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. Takeovers: Their Causes and Consequences. Journal of Economic Perspectives, 1988, 2, 2148. Ling, D.C. and M.T. Petrova. Why Do REITs go Private? Differences in Target Characteristics, Acquirer Motivations, and Wealth Effects in Public and Private Acquisitions. Journal of Real Estate Finance and Economics, 2011, 43:1, 99129. Martynova, M. and L. Renneboog. A Century of Corporate Takeovers: What Have We Learned and Where Do We Stand? Journal of Banking and Finance, 2008, 32:10, 214877. Mueller, D.C. A Theory of Conglomerate Mergers. Quarterly Journal of Economics, 1969, 83: 4, 64359. Myers, S. and N. Majluf. Corporate Financing and Investment Decisions When Firms Have Information that Investors Do Not Have. Journal of Financial Economics, 1984, 13, 187221. Rhodes-Kropf, M., D. Robinson, and S. Viswanathan. Valuation Waves and Merger Activity: The Empirical Evidence. Journal of Financial Economics, 2005, 77:3, 561603. Roll, R. The Hubris Hypothesis of Corporate Takeovers. Journal of Business, 1986, 59, 197 216. Shleifer, A. and R.W. Vishny. Takeovers in the 60s and the 80s: Evidence and Implications. Strategic Management Journal, 1991, 12, 5159. Womack, K.S. (2012). Real Estate Mergers: Corporate Control & Shareholder Wealth. Journal of Real Estate Finance and Economics, forthcoming.

Randy I. Anderson, University of Central Florida Orlando, FL 32816-1400 and EBS Business School, Wiesbaden, 65189 Germany or randerson@bus.ucf.edu. Henrik Medla, EBS Business School, Wiesbaden, 65189 Germany or henrik. medla@ebs-remi.de. Nico B. Rottke, EBS Business School, Wiesbaden, 65189 Germany and University of Central Florida Orlando, FL 32816-1400 or nico.rottke@ebs.edu. Dirk Schiereck, Tech University Darmstadt, D-64289 Darmstadt, Germany and EBS Business School, Wiesbaden, 65189 Germany or schiereck@bwl.tu-darmstadt.de.

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