American Assets Raises $564 Million in First IPO of U.S. REIT in 17 Months
American Assets Trust Inc. raised $564 million, more than originally sought, in the largest initial public offering of a U.S. real estate investment trust in more than a year.
The owner of properties from San Francisco to Honolulu sold 27.5 million shares at $20.50 each yesterday after offering 25 million for $19 to $21 apiece, according to data compiled by Bloomberg. The sale was the biggest for a U.S. REIT since Starwood Property Trust Inc. raised $932 million in August 2009. The San Diego-based investment trust will begin trading on the New York Stock Exchange today under the ticker AAT.
American Assets completed the first U.S. initial offering of 2011 after more than half the IPOs by REITs last year left buyers with losses, data compiled by Bloomberg show. Barclays Plc of London estimates U.S. initial sales will raise $50 billion this year, an increase of 34 percent, after the Standard & Poor’s 500 Index recovered all of its losses spurred by the collapse of Lehman Brothers Holdings Inc. in September 2008.
“Investors are adjusting their risk profile,” said Daniel Genter, president of RNC Genter Capital Management in Los Angeles, which oversees about $3.7 billion. “People are becoming less concerned about the bottom falling out from under them.”
Bank of America Corp. of Charlotte, North Carolina, Wells Fargo & Co. in San Francisco and New York-based Morgan Stanley led the offering. American Assets owns office, retail and hotel properties in California, Hawaii and Texas valued at about $2 billion, according to Green Street Advisors, which has specialized in real estate research for more than two decades.
Proceeds from the IPO will be used to pay debt. At the original midpoint price, American Assets would have had a market capitalization of $1.01 billion, or a 5.9 percent discount to its net asset value of about $1.08 billion, its prospectus and data compiled by Bloomberg show. Non-mortgage REITs trade at an average premium of 17 percent, according to Green Street.
The eight REITs that completed U.S. IPOs in 2010 advanced an average of 1.9 percent, trailing the 13 percent climb by the S&P 500, according to data compiled by Bloomberg. Ten property trusts postponed or withdrew their initial sales, the data show.
Date: 13 January 2011 | For the full report, please visit http://www.bloomberg.com
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