The real estate industry has recently witnessed significant and pervasive consolidation with further growth and consolidation generally viewed as a foregone conclusion. For example, between 1990 and 1997, growth in average net real estate investments by large REITs outpaced growth in average net...

We test whether consolidation leads to increased profits through increased operating economies of scale. For a sample of apartment REITs, we find that economies of scale with respect to portfolio acquisitions existed in 1994 and 1995, however, this advantage has declined over time. While growth...