The pricing of property trust IPOs in Australia

Following Brounen and Eichholtz (2002) this paper adds to the international literature investigating the underpricing of REIT initial public offerings (IPOs), with a study into Australian property trusts. This study finds that initial day returns can in part be explained by forecast profit distributions (or dividends) and the market sentiment towards property trusts from the date of the prospectus to the date of listing. There is some support for the “winners curse” explanation of underpricing with evidence that large investor or institutional involvement at the outset of the IPO also has some explanatory power.

The costs of raising equity capital by Australian property trust initial public offerings

This paper reports some of the direct costs of raising equity capital by property trust initial public offerings (IPOs) in Australia from 1994 to 2004. It also documents the amount of underpricing by these IPOs. The results indicate the average fees paid to underwriters and/or stockbrokers in managing and marketing the issue was around 3.3% of the public equity capital raised. The average fees paid to legal firms, accounting firms and valuers for their professional involvement and expert reports were 0.4%, 0.2% and 0.1% respectively, totaling 0.7% of the equity raised. Other fees such as printing, listing fees, postage, distribution and advertising cost around 2.1%. The total average direct costs amounted to around 6.1% of the proceeds raised. The average underpricing by these property trust IPOs was 2.6%. This paper also investigates the hypotheses that the percentage direct capital raising costs are influenced by the size of the IPO and whether the IPO is underwritten. This study confirms that larger property trust equity capital raisings have lower percentage total direct cost;, however, it does not find that underwriting significantly influences the percentage of total direct costs for these property trust IPOs.

Factors influencing money left on the table by property trust IPO issuers

While previous listed property trust (LPT) initial public offering (IPO) studies have identified low under pricing returns, this study specifically examines the amount of money left on the table by the pre-IPO owners in this category of IPO. This study investigates 58 property trust IPOs in Australia from 1994 to 2004 and finds that the amount of money left by LPT IPOs is considerably less than industrial company IPOs, implying considerably less uncertainty about the valuation of such IPOs compared to industrials. We also find that more recent (post 2000) LPT IPOs in Australia appear to be significantly different to previous LPT IPOs in both money left and under pricing terms.

Isolated transactions: current income tax implications

Profits from isolated transactions will often be potentially caught by the capital gains tax provisions of the income tax legislation. Because the provisions usually tax gains at concessional rates but only apply to gains that are not otherwise taxable, it is important to determine when gains from isolated transactions constitute ordinary income. This article discusses when isolated transactions generate ordinary income, as well as briefly mentioning what statutory provisions they might be assessable under. Isolated transactions will generate ordinary income when the transaction has the sufficient indicia of a business, or when it comes under one of the strands of Commissioner of Taxation (Cth) v Myer Emporium Ltd (1987) 163 CLR 199. However, the law in this area is complex and unclear in parts. The relevant tax ruling, TR 92/3, is incomplete and at times inaccurate and so is of very limited assistance.

Effect of the thermomechanical processing parameters on the microstructure-property relationships in C-Mn-Si TRIP steel

In this work a wide range of roughing (deformation in the austenite recrystallised region) and finishing (deformation in the non-recrystallised region) strains and isothermal holding times were used to clarify the effect of processing parameters on the transformation kinetics and mechanical properties of 0.2C-1.55Mn-1.55Si (wt%) TRIP steel. The results have highlighted the complex relationships between multi-phase microstructure and mechanical properties of TRIP steel. The presence of the triclinic carbides, formed during isothermal holding, deteriorated the mechanical properties of steel studied.

The characteristics of property trust IPOs in Australia

This paper follows Ling and Ryngaert (1997) and Brounen and Eichholtz (2001) who investigate the underpricing of REIT initial public offerings (lPOs) in the United States and Europe respectively. This study adds to the international literature by investigating Australian property trusts. It reports a variety of descriptive statistics on 37 Australian property trust IPOs from 1994 to 1999. What it also contributes is the finding that some IPOs have extremely low volumes of shares traded on the first day so the simple use of a closing price at the end of the first day to determine underpricing returns (without reference to the volume of trading) may not always be the optimum method of calculating these returns.