You are not logged in.
Openly accessible

The direct costs of raising external equity capital for US REIT IPOs

Bairagi, Ranajit Kumar and Dimovski, William 2012, The direct costs of raising external equity capital for US REIT IPOs, Journal of property investment and finance, vol. 30, no. 6, pp. 538-562, doi: 10.1108/14635781211264513.

Attached Files
Name Description MIMEType Size Downloads
dimovski-thedirect-post-2012.pdf Author post print application/pdf 1.30MB 72

Title The direct costs of raising external equity capital for US REIT IPOs
Author(s) Bairagi, Ranajit Kumar
Dimovski, WilliamORCID iD for Dimovski, William orcid.org/0000-0002-0038-8848
Journal name Journal of property investment and finance
Volume number 30
Issue number 6
Start page 538
End page 562
Total pages 25
Publisher Emerald
Place of publication Bingley, England
Publication date 2012-09
ISSN 1463-578X
1470-2002
Keyword(s) total direct costs
direct costs
United States of America
world economy
equity capital
global financial crisis
non-underwriting direct expenses
underwriting fees
Summary Purpose – The purpose of this paper is to investigate the total direct costs of raising external equity capital for US real estate investment trust (REIT) initial public offerings (IPOs).

Design/methodology/approach – The study provides recent evidence on total direct costs for a comprehensive dataset of 125 US REIT IPOs from 1996 until June 2010. A multivariate OLS regression is performed to determine significant factors influencing the level of total direct costs and also underwriting fees and non-underwriting direct expenses.

Findings – The study finds economies of scale in total direct costs, underwriting fees and non-underwriting expenses. The equally (value) weighted average total direct costs are 8.33 percent (7.52 percent), consisting of 6.49 percent (6.30 percent) underwriting fees and 1.87 percent (1.22 percent) non-underwriting direct expenses. The study finds a declining trend of total direct costs for post 2000 IPOs which is attributed to the declining trend in both underwriting fees and non-underwriting direct expenses. Offer size is a critical determinant for both total direct costs and their individual components and inversely affects these costs. The total direct costs are found significantly higher for equity REITs than for mortgage REITs and are also significantly higher for offers listed in New York Stock Exchange (NYSE). Underwriting fees appear to be negatively influenced by the offer price, the number of representative underwriters involved in the issue, industry return volatility and the number of potential specific risk factors but positively influenced by prior quarter industry dividend yield and ownership limit identified in the prospectus. After controlling for time trend, the paper finds REIT IPOs incur higher non-underwriting direct expenses in response to higher industry return volatility prior to the offer.

Originality/value – This paper adds to the international REIT IPO literature by exploring a number of new influencing factors behind total direct costs, underwriting fees and non-underwriting direct expenses. The study includes data during the recent GFC period.
Notes Reproduced with the kind permission of the copyright owner.
Language eng
DOI 10.1108/14635781211264513
Field of Research 150299 Banking, Finance and Investment not elsewhere classified
Socio Economic Objective 900199 Financial Services not elsewhere classified
HERDC Research category C1 Refereed article in a scholarly journal
Copyright notice ©2012, Emerald Group Publishing Limited
Free to Read? Yes
Persistent URL http://hdl.handle.net/10536/DRO/DU:30049163

Connect to link resolver
 
Unless expressly stated otherwise, the copyright for items in DRO is owned by the author, with all rights reserved.

Every reasonable effort has been made to ensure that permission has been obtained for items included in DRO. If you believe that your rights have been infringed by this repository, please contact drosupport@deakin.edu.au.

Versions
Version Filter Type
Citation counts: TR Web of Science Citation Count  Cited 0 times in TR Web of Science
Scopus Citation Count Cited 3 times in Scopus
Google Scholar Search Google Scholar
Access Statistics: 263 Abstract Views, 74 File Downloads  -  Detailed Statistics
Created: Fri, 26 Oct 2012, 11:42:22 EST by Aysun Alpyurek

Every reasonable effort has been made to ensure that permission has been obtained for items included in DRO. If you believe that your rights have been infringed by this repository, please contact drosupport@deakin.edu.au.