The underpricing of US REIT IPOs : 1996–2010

Bairagi, Ranajit Kumar and Dimovski, William 2011, The underpricing of US REIT IPOs : 1996–2010, Journal of property research, vol. 28, no. 3, pp. 233-248, doi: 10.1080/09599916.2011.577905.

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Title The underpricing of US REIT IPOs : 1996–2010
Author(s) Bairagi, Ranajit Kumar
Dimovski, WilliamORCID iD for Dimovski, William
Journal name Journal of property research
Volume number 28
Issue number 3
Start page 233
End page 248
Total pages 16
Publisher Routledge
Place of publication Abingdon, England
Publication date 2011-09
ISSN 0959-9916
Keyword(s) underpricing
United States
global financial crisis
Summary This study examines the underpricing cost of 123 US REIT IPOs over the period 1996 until June 2010, including the period of the global financial crisis. The study uses OLS multivariate regression to determine some potential factors behind underpricing. The underpricing cost of raising REIT external equity averaged 3.18% using an equal weighting for each of the 123 REIT IPOs. The study finds offer size is positively related to underpricing. A value weighted approach finds that underpricing averages 4.67% and suggests larger offer size is an important determinant for leaving more money on the table. Higher reputation underwriters, the industry differentiated auditor and post offer ownership structure negatively influence underpricing. The study documents declining underpricing over time with the period of 2007–2010 experiencing negative underpricing (overpricing) during the global financial crisis (GFC). Offers during the hot periods of 1997 and 2004 and the office/industrial property type were more highly underpriced. The 10-year treasury interest rate is identified as another significant positive determinant of underpricing.
Language eng
DOI 10.1080/09599916.2011.577905
Field of Research 150299 Banking, Finance and Investment not elsewhere classified
Socio Economic Objective 900101 Finance Services
HERDC Research category C1 Refereed article in a scholarly journal
Copyright notice ©2011, Taylor & Francis
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