This study analyses 45 Australian Real Estate Investment Trust (A-REIT) initial public offerings (IPOs) in Australia from January 2002 to June 2008, since the introduction of the single responsible entity to oversee the activities of listed property trusts (LPTs) Rather than the trustee and manager roles. The study finds that this sample of A-REIT IPOs had a significant 3.37% underpricing and that the direct costs of capital raising help explain this indirect cost of underpricing. There is some evidence to suggest that A-REIT IPOs that seek to raise more equity capital have less underpricing, while those that are subscribed to more quickly have higher underpricing. The findings offer insights for issuers who seek to maximize the value of the A-REIT at the time of the IPO, underwriters who guarantee the success of the capital raising and for investors who are looking to invest in Australian A-RE1T 1POs.
Reproduced with the kind permission of the copyright owner.
Field of Research
150403 Real Estate and Valuation Services 150205 Investment and Risk Management
Socio Economic Objective
900199 Financial Services not elsewhere classified
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