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An investigation into the drivers of Australian REIT merger and acquisition announcements

Ratcliffe, Chris and Dimovski, Bill 2013, An investigation into the drivers of Australian REIT merger and acquisition announcements, Journal of property investment and finance, vol. 31, no. 5, pp. 441-461, doi: 10.1108/JPIF-02-2013-0012.

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Title An investigation into the drivers of Australian REIT merger and acquisition announcements
Author(s) Ratcliffe, ChrisORCID iD for Ratcliffe, Chris orcid.org/0000-0003-3687-7720
Dimovski, Bill
Journal name Journal of property investment and finance
Volume number 31
Issue number 5
Start page 441
End page 461
Total pages 21
Publisher Emerald Group Publishing Limited
Place of publication Bingley, England
Publication date 2013
ISSN 1463-578X
1470-2002
Keyword(s) acquisitions and mergers
Australia
real estate
investments
trusts
real estate investment trusts
A-REITs
Summary Purpose – The purpose of this paper is to use Australian Real Estate Investment Trust (A-REIT) data to empirically examine potential influencing factors on A-REITs becoming a bidder or a target in the mergers and acquisitions (M&A) area.

Design/methodology/approach – This study uses logistic regression analysis to investigate the odds of publically traded A-REITs being either a bidder or a target as a function of a number of financial and corporate governance variables.

Findings – Prior research in the US REIT M&A area has shown that target size is inversely related to takeover likelihood; in contrast, the authors’ Australian results show that size has a positive impact. Prior research on share price and asset performance has shown that underperformance increases the odds of an entity becoming a target, but this paper’s results further support these findings and provide confirmation of the inefficient management hypothesis. For acquirers it was found that leverage, cash balances, management structure, the level of shares held by related parties and the global financial crisis have an important impact on bidder likelihood.

Practical implications – Given that the literature suggests that investors can earn significant positive abnormal returns by owning targets, but incur significant abnormal losses by owning bidders, at announcement, this study will be useful to fund managers and other investors in A-REITs by investigating the characteristics of those firms that become targets and bidders.

Originality/value – This paper adds to the recent US REIT M&A literature by examining the second biggest REIT market in the world and reporting a number of factors that might influence A-REITs to become targets or bidders.
Language eng
DOI 10.1108/JPIF-02-2013-0012
Field of Research 150201 Finance
Socio Economic Objective 900203 Property Services (incl. Security)
HERDC Research category C1 Refereed article in a scholarly journal
Copyright notice ©2013, Emerald Group Publishing
Persistent URL http://hdl.handle.net/10536/DRO/DU:30054869

Document type: Journal Article
Collections: School of Accounting, Economics and Finance
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Every reasonable effort has been made to ensure that permission has been obtained for items included in DRO. If you believe that your rights have been infringed by this repository, please contact drosupport@deakin.edu.au.