Factors Influencing the Direct Costs of Property Trust Ipos

Dimovski, William; Brooks, Robert Darren

doi:10.1080/14445921.2007.11104220

Cited by 9 publications

(5 citation statements)

References 20 publications

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“…Table 4 reports the regression results relating to factors influencing the underwriting fees of J-REIT IPOs. Consistent with Chen and Lu (2006) and Dimovski and Brooks (2007) it appears that clear economies of scale exist, larger capital raisings (LNCAPRAISED) benefit with lower underwriting fees. Table 4 identifies this feature in the whole data set of the 40 IPOs during 2001 to 2006 and also in the reduced data set of 34 IPOs during 2003 to 2006.…”

Section: Resultsmentioning

confidence: 64%

“…Dimovski and Brooks (2007) investigate 58 Australian property trust IPOs from 1994 to 2004 and find underwriting, legal, accounting and valuation costs average around 3.3%, 0.39%, 0.23% and 0.12% respectively of proceeds raised. They also confirm clear economies of scale in direct capital raising costs and that property trust IPOs that employ more debt are likely to have higher direct capital raising costs.…”

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confidence: 99%

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The Pricing and Underwriting Costs of Japanese REIT IPOs

Kutsuna¹,

Dimovski²,

Brooks³

2008

Journal of Property Research

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This study investigates 40 Japanese REIT IPOs during 2001 to 2006 and finds evidence that higher final offer prices are reflected in higher underpricing levels by such IPOs. There is also some evidence that the engagement of one of the big three Japanese underwriting firms suggests less money is left on the table. Economies of scale in underwriting fees for Japanese REIT IPOs are also found. Specifically, the percentage underwriting fees decrease with higher amounts of equity capital sought but the percentage fee decreases at a diminishing rate.

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Section: Resultsmentioning

confidence: 64%

Section: Downloaded By [Heriot-watt University] At 08:03 27 December mentioning

confidence: 99%

The Pricing and Underwriting Costs of Japanese REIT IPOs

Kutsuna¹,

Dimovski²,

Brooks³

2008

Journal of Property Research

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“…They argue that higher dividend forecasting trusts are riskier and hence higher underpricing is found in such trusts. In some follow up work on 20 property trust IPOs during 2002 to 2004, Dimovski and Brooks (2006b) speculate that post 1999 LPT IPOs may offer higher underpricing than earlier IPOs given the merging of the trustee and manager roles into a single responsible entity role. Fund managers can indeed take this role.…”

Section: Previous Property Trust and Reit Ipo Researchmentioning

confidence: 99%

“…The purpose of this paper is to investigate the underpricing returns of Australian A-REIT IPOs from January 2002 to June 2008 and extend the work in Dimovski and Brooks (2006b) which investigated only a small sample of 20 LPT IPOs from 2002 to 2004 and speculated that the post 2000 LPT IPOs may have more valuation uncertainty than those before 2000. Prior to June 30, 2000, Australian LPTs engaged both a Manager (to manage the activities of the trust) and a Trustee (to grant approval for property acquisitions and disposals).…”

Section: Introductionmentioning

confidence: 99%

The Underpricing of A-REIT IPOs in Australia During 2002 to 2008

Dimovski

2010

Pacific Rim Property Research Journal

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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-REIT IPOs.

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“…In Australia, Dimovski (2006) and Dimovski and Brooks (2007) have worked on reporting some of the direct costs of equity capital raised by Australian REIT IPOs during 1994-2004. Briefly, they report average underwriting fees of 3.3 percent and find economies of scale in direct costs.…”

Section: Equity Capital For Us Reit Iposmentioning

confidence: 99%

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

Bairagi

Dimovski

2012

Journal of Property Investment &Amp; Finance

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PurposeThe 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/approachThe 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.FindingsThe 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/valueThis 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.

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Factors Influencing the Direct Costs of Property Trust Ipos

Abstract: Underwriting, legal, accounting and valuation costs average around 3.3%, 0.39%, 0.23% and 0.12%

Cited by 9 publications

References 20 publications

The Pricing and Underwriting Costs of Japanese REIT IPOs

The Pricing and Underwriting Costs of Japanese REIT IPOs

The Underpricing of A-REIT IPOs in Australia During 2002 to 2008

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

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