The underpricing of US REIT IPOs: 1996--2010

Ranajit Kumar Bairagi and Bill Dimovski ()

Journal of Property Research, 2010, vol. 28, issue 3, 233-248

Abstract: 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.

Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://hdl.handle.net/10.1080/09599916.2011.577905 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:jpropr:v:28:y:2010:i:3:p:233-248

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RJPR20

DOI: 10.1080/09599916.2011.577905

Access Statistics for this article

Journal of Property Research is currently edited by Bryan MacGregor

More articles in Journal of Property Research from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().