The Underpricing of LPT IPOs in Australia during 2002 to 2008.

This study analyses 45 property trust 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 property trust 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 also to suggest that property trust 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 seeks to maximize the value of the trust 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 property trust IPOs