Investment Opportunities for Private REITs and RELPs Bankrupt Properties: An Empirical Examination

Abstract

Executive Summary This paper provides the first large-sample evidence on privately-held real estate firm bankruptcy asset sales within Chapter 7 and 11. Section 363(f) of the Bankruptcy Code authorizes a sale of property free and clear of any interest in such property. Using a unique dataset, we find that 65.9% of private real estate investment trusts (REITs) and real estate limited partnerships (RELPs) sell assets within bankruptcy. The results reveal that RELPs are liquidated and sold more often than REITs and the REITs that survive and avoid asset sales are those that have captive relationships with a parent corporation.