The doctoral dissertations of the former Helsinki University of Technology (TKK) and Aalto University Schools of Technology (CHEM, ELEC, ENG, SCI) published in electronic format are available in the electronic publications archive of Aalto University - Aaltodoc.
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Dissertation for the degree of Doctor of Science in Technology to be presented with due permission of the Department of Surveying for public examination and debate in Auditorium E at Helsinki University of Technology (Espoo, Finland) on the 20th of October, 2006, at 12 o'clock noon.
Overview in PDF format (ISBN 951-22-8395-6) [200 KB]
Dissertation is also available in print (ISBN 951-22-8394-8)
The discussion of whether to own or lease corporate real estate has increased a lot in Europe during the past ten years. Academic writings have indicated that corporate real estate is a non-core function that should be outsourced to professionals.
This doctoral thesis' first aim was to describe the main reasons for the major corporate real estate disposals carried out in Europe in recent years. The second aim was to identify how the corporations have been able to meet the goals set for the disposals and what has been the disposal impact on their performance. The corporations' main achievements and difficulties during and after the disposal process were also discussed. The thesis also gave views on how the market for real estate sale and leasebacks is going to develop in the future in Finland. Based on the information gathered from the previous European real estate disposals, this doctoral thesis built a framework which corporations can use when they are making decisions about their real estate ownership.
Corporate real estate often requires several strategies because of the different business functions that need to be supported. This means that also the optimal technique to finance corporate real estate should differ between asset types. Nevertheless, when the opportunity cost of the capital tied in corporate real estate and the different risk-return profile of real estate compared to corporate core businesses have been taken into account, the ownership of CRE seems often questionable. Further, there seems to be proof that the stock markets often valuate corporate real estate incorrectly meaning that corporations can obtain abnormal stock market gains through real estate disposals. Despite these facts, still many successful corporations own a lot of real estate. One common reason for this is that lease contracts can in the worst case be very inflexible long-term commitments.
It is clear that if a corporation decides to divest its corporate real estate holdings, it should do this during good times. Disposing real estate in financial distress will usually lead to bad deal terms that can create problems in the future.
This thesis consists of an overview and of the following 5 publications:
Keywords: corporate real estate, sale and leaseback, outsourcing, performance
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© 2006 Helsinki University of Technology