Abstract
We examine the differing influences of equity and asset acquisitions in Real Estate Investment Trusts (REITs) considering the prevalence of REIT asset acquisitions as frequent and major investment decisions. We examine the impact of asset purchase announcements on market returns, operating performance, and dividend payout. Our results suggest that asset acquisitions are better for the acquiring firm than equity acquisitions. Specifically, we find that equity acquisitions result in significantly negative market reactions, where asset acquisitions do not. Both equity and asset acquisitions have a negative influence on operating performance; however, the effect is significantly less for asset acquisitions.
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