CREF Professors Win Best Retail Real Estate Paper Award from ARES

A research study written by two Center for Real Estate and Finance (CREF) faculty members has won the best paper award in retail real estate in this year’s annual American Real Estate Society (ARES) competition. The highly selective competition involves more than 250 papers presented at the ARES annual conference, which was held in April this year in Seattle. The award was sponsored by the International Council of Shopping Centers (ICSC).

The paper, by Crocker Liu and Peng Liu, analyzes the financial fallout that occurs for shopping center owners when their tenants close stores due to bankruptcy. Crocker Liu is the Robert A. Beck Professor of Hospitality Financial Management, and Peng Liu is an assistant professor of real estate. Their research employed data provided by CREF Fellows, including from data from coStar, Real Capital Analytics, and SNL Securities. The ICSC also provided data.

The paper, “Is What’s Bad for the Goose (Tenant), Bad for the Gander (Landlord)?: A Retail Real Estate Perspective,” examined a critical topic for retail shopping centers. When a tenant goes bankrupt and closes its store, other stores can exercise what is called a co-tenancy option and also pull out or at least cut their rent. Studying shopping centers owned by real estate investment trusts (REITs), Liu and Liu found that the anchor store closing usually means a snowball of additional financial losses when other stores exercise that co-tenancy clause. However, they also found that this does not always occur. In markets with strong, diversified economies, the center owners have actually been able to increase their cash flow by arranging better leases for the newly empty space.

The shopping center study is not the only CREF-supported paper that has won an award this year. A paper co-authored Peng Liu, "Real Earnings Management and Dividend Payout Signals: A Study for U.S. Real Estate Investment Trusts," written with Robert Edelstein of U.C. Berkeley and Desmond Tsang of McGill, won the best paper award as second runner-up at the 2011 Global Chinese Real Estate Conference (GCREC) meeting in Hangzhou, China.

The ARES conference is the largest of its kind. The association’s goal is to encourage research and promote education in real estate and to improve communication and exchange of information in real estate and allied matters among college and university faculty and practicing professionals. ICSC is the world’s largest professional organization affiliated with owners of retail property.