None of the existing studies addresses whether properties with similar

characteristics will sell at a premium (discount) if they are part of a portfolio transaction.

By bundling together several properties in one transaction, buyers may enjoy acquisition

economies of scale, decreased transaction costs, as well as decreased search costs. A

portfolio acquisition can provide the buyer with quick exposure or focus in a desired

geographical or property market. However, such transactions are also more complex to

negotiate and complete. All else equal, a portfolio buyer may be willing to give up some

of the expected benefits from acquisition and pay a premium to obtain a desired portfolio.

The premium paid will also depend on the market power of the real estate portfolio

buyer. Therefore, in cases involving large influential buyers (e.g. REITs, or institutions) a

discount associated with real estate portfolio purchase may be observed. Anecdotal

evidence from the real estate professional press suggests that portfolio acquisitions by

REITs are frequently the quickest and cheapest way for REITs to acquire properties.

They can consequently turn around and dispose of less attractive properties.

 Sale-Leasebacks

 In a sale-leaseback transaction, a firm sells an asset, such as real estate property or

equipment, to another firm and simultaneously leases it back. Academic research focuses

on tax motivation as the major source of value creation in corporate sale-leasebacks (see

Miller and Upton (1976), Lewellen, Long and McConnell (1976), Myers, Dill and

Bautista (1976), Brealey and Yong (1980)). Recent studies including Smith and

Wakeman (1984), Alvayay, Rutherford and Smith (1995), Moyer and Krishnan (1995)

and Lasfer and Levis (1998) confirm the importance of tax related motivations to lease or

buy, but also acknowledge other non-tax incentives. Leasing offers benefits to the lessor

by increased non-debt tax shields through depreciation. Sale-leasebacks create value