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

Dimovski, William

doi:10.1080/14445921.2010.11104294

Cited by 16 publications

(11 citation statements)

References 26 publications

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“…The launch of new capital markets IPO products such as REIT and Listed Property Trust (LPT) has also become very popular to be discussed in the IPO Phenomenon literature (Bairagi & Dimovski, 2011;H. Chen & Lu, 2006;Dimovski, 2010) and included in the subject of Phenomena flipping action (Bayley, Lee, & Walter, 2006;Dimovski, 2010).…”

Section: Literature Reviewmentioning

confidence: 99%

EVENT STUDY OF IPO IN INDONESIA: PUMP-AND-DUMP & FLIPPING STRATEGY ANALYSIS

Sudarmaji

Ambarwati

Hubbansyah

et al. 2020

JAFM

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There were three important IPO anomalies: the positive average initial return (improperly called short-term 'underpricing'), the long-term underperformance, and hot/cold IPO. The EVENT STUDY model explained the 'underpricing' based on the assumption that the underwriter sets the initial price equal to the market-perceived true value and investors were rational. IPO prices are affected by demand and supply. The idea of the model was to explore pump-and-dump and flipping patterns exhibited upon IPO anomalies event in Indonesia. Pump-and-dump is the strategy to manipulate stock prices, while flipping was stocks bought at the IPO and sold at early days ta listing date. This strategy oftentimes exhibits anomalous behavior. Some implications of this model for the IPO market were positive 1st-day initial return (IR) and a negative relation cumulative average abnormal 5-days abnormal return (CAAR-5days) for flipping strategy. The other was a relationship between underperformance cumulative average 30-days abnormal returns (CAAR-30days) and cumulative average 5-days (CAAR-5days) abnormal returns in terms of pump-and-dump strategy. Using the relation between the Characteristics (Size of issue, Board and Floating rate) and Macroeconomics Condition (Central Bank Rate, Inflation rate, USD/IDR exchange, and GDP growth), and the IR, a CAAR-5days and a CAAR-30days, this EVENT STUDY explained the existence of the pump-and-dump and flipping pattern in the Indonesian stock exchanges. The Authors implemented a multivariate analysis of variance (MANOVA) to test hypotheses regarding the effect of a three-variables dependent (the initial return, a 5-days abnormal return, and a 30-days abnormal return) into several dependent variables. Using the IPO data taken from 2015-2019, the paper found that this EVENT STUDY explained the existence of pump-and-dump and flipping patterns at the early trading of IPO stocks in the Indonesia Exchange Market.

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Section: Literature Reviewmentioning

confidence: 99%

EVENT STUDY OF IPO IN INDONESIA: PUMP-AND-DUMP & FLIPPING STRATEGY ANALYSIS

Sudarmaji

Ambarwati

Hubbansyah

et al. 2020

JAFM

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“…The capital raising activities of firms is an important issue for management. A good deal has been written about the initial public offering (lPO) activities of Australian Real Estate Investment Trusts (A-REITs) (for example Brooks 2006 andDimovski 2010). More recently Dimovski (20 11) has documented some of the characteristics of A-REIT rights issues.…”

Section: Introductionmentioning

confidence: 99%

Characteristics of A-Reit Private Placements During the Global Financial Crisis

Dimovski

O’Neill

2012

Pacific Rim Property Research Journal

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The study investigates a variety of characteristics surrounding Australian Real Estate Investment Trust (A-REIT) private placements with a dataset of A-REIT private placements from July 2006 to June 2011. The private placement of equity securities raised over A$lO.4 billion for A-REITs during this period of which nearly A$7.3 billion was raised after the December 2007 Centro Properties liquidity problem announcements and the subsequent global financial crisis, with most of this capital raised during 2008 and 2009. The size and speed of the capital raising continues to suggest that A-REITs are regarded highly by the investment community. Additionally, while the general finance literature suggests that existing shareholders do not fare badly from private placements offered to subscribers issued at a discount, this is the first Australian REIT study to report similar findings.

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“…A considerable amount of literature has been published on the performance of A-REITs before and during the GFC. Newell and Peng (2009) provided a comprehensive summary of previous A-REIT studies listing the topics such as: performance analysis of the A-REITs (Lee et al, 2007(Lee et al, , 2008Newell, 2006;Newell and Peng, 2006;Tan, 2003, 2004;Peng, 2004;Tan, 2004a, b;Ratcliffe and Dimovski, 2007;Dimovski, 2011), A-REIT initial public offerings (IPOs) (Chikolwa, 2007(Chikolwa, , 2008Brooks, 2006a, b, 2007;Dimovski, 2010), interest rate risk (Newell and Tan, 2005;Newell, 2006;Ratcliffe and Dimovski, 2007;Newell and Peng, 2009), systematic risk (β) (Dimovski, 2009;Morri and Romito, 2017), risk management strategies (Tan, 2004c, d;Newell and MacIntosh, 2007;Newell and Peng, 2008) and environmental sustainability policies (Newell, 2008).…”

Section: Australian Reitsmentioning

confidence: 99%

Explaining the premium to NAV in publicly traded Australian REITs, 2008–2018

Erol¹,

Tyvimaa²

2019

JPIF

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Purpose The purpose of this paper is to explore the levels and determinants of net asset value (NAV) premiums/discounts for publicly traded Australian Real Estate Investment Trust (A-REIT) market during the last decade. A-REITs were severely affected by the global financial crisis as S&P/ASX 200 A-REIT index-listed property stocks experienced 47 per cent discount to NAV, on average, in 2008–2009 crisis. Since 2013, A-REIT sector has exhibited a strong recovery from the financial crisis and traded at high premiums to date. Understanding the relationship between pricing in the public and private real estate markets has taken on great importance as A-REITs continue to trade at significant premium to NAV unlike their counterparts in the USA and Europe. Design/methodology/approach This paper follows a rational approach to explain variations in NAV premiums and explores the company-specific factors such as liquidity, financial leverage, size, stock price volatility and portfolio diversification behind the A-REIT NAV premiums/discounts. The study specifies and estimates a model of cross-sectional and time variation in premiums/discounts to NAV using semi-annual data for a sample of 40 A-REITs over the 2008–2018 period. Findings The results reveal that A-REIT premiums to NAV can be explained not only by the liquidity benefit of listed property stocks but also positive financial leverage effect. During the past decade, A-REITs have followed an aggressive approach in financing their growth by using borrowed funds to purchase assets as the income from the property offsets the cost of borrowing and the risk that accompanies it. Debt-to-equity ratio has to be considered as an important source of NAV premiums as highly geared A-REITs that favoured debt financing over equity financing traded at significant premiums to NAV of their underlying real estate assets. Practical implications The paper includes implications for the REIT market investors. The regression analysis shows that specialty A-REITs with a focus on creative market niches traded at higher premiums compared with other property stocks, especially in the post-GFC recovery period. Specialty REITs are more highly valued by the market than their traditional specialised counterparts (e.g. office and retail REITs), and those pursuing a diversified strategy. Originality/value This paper presents an Australian case study as the A-REIT market provides a suitable environment for testing the effect of financial gearing on the REIT premium to NAV. The study provides empirical evidence supporting the importance of debt-to-equity ratio in explaining the variation in A-REIT NAV premiums.

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

Cited by 16 publications

References 26 publications

EVENT STUDY OF IPO IN INDONESIA: PUMP-AND-DUMP & FLIPPING STRATEGY ANALYSIS

EVENT STUDY OF IPO IN INDONESIA: PUMP-AND-DUMP & FLIPPING STRATEGY ANALYSIS

Characteristics of A-Reit Private Placements During the Global Financial Crisis

Explaining the premium to NAV in publicly traded Australian REITs, 2008–2018

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