IPOs and SEOs in the US Real Estate Industry

74 Pages·2017·0.891 MB·English

by  Philip Radner (auth.)

Essays in Real Estate Research Band 13
Nico B. Rottke · Jan Mutl Hrsg.
Philip Radner
IPOs and SEOs
in the US Real
Estate Industry
Essays in Real Estate Research
Band 13
Edited By
N. B. Rottke, Eschborn, Germany
J. Mutl, Wiesbaden, Germany
Die Reihe „Essays in Real Estate Research”, herausgegeben von Professor Dr. Nico
B. Rottke FRICS und Professor Jan Mutl, Ph.D. umfasst aktuelle Forschungsarbe ­
iten der Promovenden der Lehrstühle und Professuren des Real Estate Manage­
ment Institutes der EBS Business School. Forschungs­ und Lehrschwerpunkte des
Institutes bilden die interdisziplinären Aspekte der Immobilientransaktion sowie
die nachhaltige Wertschöpfungskette im Immobilienlebenszyklus. Die Kapital­
märkte werden als essenzieller Bestandteil der Entwicklung der Immobilienmärkte
aufgefasst.
Die in der Regel empirischen Studien betrachten transaktions­ und kapitalmark­
tnahe Themenbereiche aus dem Blickwinkel der institutionellen Immobiliengew­
erbe­ und ­wohnungswirtschaft, wie bspw. Finanzierung, Kapitalmarktstruktur,
Investition, Risikomanagement, Bewertung, Ökonomie oder Portfoliomanage­
ment, aber auch angewandte Themen wie Corporate Real Estate Management,
Projektentwicklung oder Unternehmensführung. Die ersten 11 Bände der Reihe
erschienen bis 2014 auch im Immobilien Manager Verlag, Köln.
The series “Essays in Real Estate Research”, published by Professor Dr. Nico B.
Rottke FRICS and Professor Jan Mutl, Ph.D., includes current research work of
doctoral students at the chairs and professorships of the Real Estate Management
Institute of EBS Business School. The research and teaching focus of the Institute
constitutes the interdisciplinary aspects of real estate transactions as well as the
sustainable value creation chain within the real estate life cycle. The capital markets
are regarded as essential components of the development of the real estate markets.
The mostly empirical studies consider transactional as well as capital market topics
from the point of view of the institutional commercial and residential real estate
industry, such as finance, capital market structure, investment, risk management,
valuation, economics or portfolio management, but also applied topics such as
corporate real estate management, real estate development, or leadership issues in
the property industry. The first 11 volumes of the series appeared up until 2014 in
Immo­bilien Manager Publishing, Cologne, as well.
Edited by
Prof. Dr. Nico B Rottke Jan Mutl
Ernst & Young Real Estate GmbH EBS Business School
Eschborn, Germany Wiesbaden, Germany
Philip Radner
IPOs and SEOs in the
US Real Estate Industry
Philip Radner
EBS Business School
Wiesbaden, Germany
PhD Thesis, EBS Business School, 2016
Essays in Real Estate Research
ISBN 978­3­658­17138­4 ISBN 978­3­658­17139­1 (eBook)
DOI 10.1007/978­3­658­17139­1
Library of Congress Control Number: 2017930959
Springer Gabler
© Springer Fachmedien Wiesbaden GmbH 2017
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Table of Contents
List of Figures ........................................................................................ VII
List of Tables .......................................................................................... IX
List of Abbreviations .............................................................................. XI
1 Introduction ....................................................................................... 1
1.1 Motivation and Problem Environment ........................................ 1
1.2 Composition and Structure of the Dissertation ............................ 1
2 IPO Underpricing in the Real Estate Industry: Analytical
Review of the Literature ................................................................... 3
2.1 Introduction ................................................................................. 3
2.2 Introduction ................................................................................. 4
2.3 IPO Underpricing in the Real Estate Literature ......................... 12
2.4 Explanatory Power of IPO Underpricing Theories .................... 21
2.5 Conclusion ................................................................................. 24
3 Textual Analysis of REIT IPO Prospectuses: Quantifying
Company Rhetoric as an Indicator of Underpricing ................... 27
3.1 Introduction ............................................................................... 27
3.2 Textual Analysis in Economic Research ................................... 28
3.3 Data and Methodology .............................................................. 30
3.4 Estimation Results ..................................................................... 31
3.5 Conclusion ................................................................................. 34
4 An Analysis of Announcement Effects of Seasoned Equity
Offerings by REITs since 2008 ...................................................... 37
4.1 Introduction ............................................................................... 37
VI Table of Contents
4.2 Theoretical Background ............................................................ 39
4.3 Data and Methodology .............................................................. 41
4.4 Results ....................................................................................... 46
4.5 Conclusion and Discussion ....................................................... 53
5 Summary and Conclusion ............................................................. 55
References .............................................................................................. 57
List of Figures
Figure 1: Average cumulative abnormal return over the event window
[-10; +10] (S&P 500 index) ............................................................ 48
Figure 2: Average cumulative abnormal return over the event window
[-10; +10] (S&P US REIT index) ................................................... 50
Figure 3: Average abnormal return over time (S&P 500 index) ..................... 51
List of Tables
Table 1: Average underpricing of industrial firm IPOs ................................. 17
Table 2: Average underpricing of US REIT IPOs ......................................... 18
Table 3: Correlation diagram ........................................................................ 32
Table 4: Variance inflation factors ................................................................ 33
Table 5: Impact of key words on IPO performance ...................................... 33
Table 6: Results of empirical studies on wealth effects of SEOs
by REITs ......................................................................................... 40
Table 7: Number and issuing volume of SEOs for the period
analyzed .......................................................................................... 43
Table 8: Results of the event study (S&P 500 index) .................................... 47
Table 9: Results of the event study (S&P US REIT index) ........................... 49
Table 10: Results of the multiple regression ................................................... 52
List of Abbreviations
% percent
AD Announcement Date
CAR Cumulative Abnormal Return
CRSP Center for Research in Security Prices
DCF Discounted Cash Flow
e.g. for example
EREIT European Real Estate Investment Trust
et al. et alii (and others)
etc. et cetera
FFO Funds From Operations
i.e. that is
IPO Initial Public Offering
OBRA Omnibus Budget Reconciliation Act
OLS Ordinary Least Squares
p. page
Propco Property Company
PV Present Value
REIT Real Estate Investment Trust
ROE Return on Equity
S&P Standard and Poor’s
SEC Securities and Exchange Commission
SEO Seasoned Equity Offering
UK United Kingdom
US United States (of America)
USA United Sates of America
USD/$ United States/American Dollar
vs. Versus