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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
Immo-bilien 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 978-3-658-17138-4 ISBN 978-3-658-17139-1 (eBook)
DOI 10.1007/978-3-658-17139-1
Library of Congress Control Number: 2017930959
Springer Gabler
© Springer Fachmedien Wiesbaden GmbH 2017
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The registered company address is: Abraham-Lincoln-Str. 46, 65189 Wiesbaden, Germany
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
1 Introduction
1.1 Motivation and Problem Environment

Raising equity, especially the execution of an initial public offering (IPO) or a
seasoned equity offering (SEO) is one of the key events in a firm’s lifetime. Due
to the major importance of these events several studies on IPOs and SEOs exist
in the economic literature. IPOs and SEOs also have been researched in the real
estate literature since the 80s. Substantial empirical evidence has been revealed
and various phenomena on IPOs and SEOs have been found. In particular, eco-
nomic literature highlights two particular phenomena. With regard to IPOs nu-
merous studies reveal that the stock price of a firm going public experiences a
substantial price increase on the first trading day. Thus, most researchers argue
that management and underwriters systematically underprice their issues. With
regard to SEOs a lot of studies show that directly after the announcement of an
SEO by the management the stock price of the firm suffers a significant price
decrease. This negative stock price reaction is known as announcement effect.
Several theories have been developed to explain these phenomena, although the
theories cannot always be applied to all kinds of industries.
However, even though IPOs and SEOs have been widely researched in the
literature there are still several questions which have not yet been answered.
First, there has been little research in the real estate literature on the textual anal-
ysis of company reports and their impact on the firm. This leads to a number of
research questions. One of it is what is the influence of information disclosure in
the IPO prospectus on IPO underpricing? Second, only a few studies exist which
focus on announcement effects after 2008. However, the subprime and US real
estate crisis 2008 should have a major impact on information asymmetries be-
tween management and investors and thus SEO announcement effects. This
leads to the question how negative stock price reactions of US REITs have
changed during the crisis and if these changes are permanent or if they return to
pre-crisis level.
1.2 Composition and Structure of the Dissertation

The main structure of this dissertation consists of three individual research pa-
pers which are integrated in this thesis. In chapter two (paper one), we examine
the main methodologies, motives, results, and theories of the current literature on

P. Radner, IPOs and SEOs in the US Real Estate Industry,
Essays in Real Estate Research 13, DOI 10.1007/978-3-658-17139-1_1
2 1 Introduction
IPO underpricing in the real estate industry. Real estate and non-real estate relat-
ed underpricing studies are summarized and classified under existing theories.
The studies highlight amongst others that the lower underpricing of REITs com-
pared to industrial companies is not only consistent across geographies, but also
over time. Moreover, in addition to the REITs’ asset base underpricing is deter-
mined also by other factors such as country-specific regulatory and market char-
acteristics. The most explanatory power in the REIT IPO context seems to have
Rock’s winner’s curse model followed by information extraction theory, signal-
ing as well as prospect theory.
Chapter three (paper two) analyzes the influence of information disclosure
in the IPO prospectus on IPO underpricing. It introduces a different approach for
measuring information disclosure and then quantifies its effect on initial returns.
The IPO prospectuses of 72 US REIT companies are analyzed on key words and
then tested on abnormal return patterns with regard to the frequent use of these
key words. Moreover, future tense is taken as a proxy for the number of promis-
es in an IPO prospectus and we test a risk-based interpretation. Firms that make
fewer promises put less information in the marketplace. Consequently, investors
should be rewarded for having less information to correctly value the issue by
underpricing. Generally, we analyze the impact of the IPO prospectus on under-
pricing and examine the relationship between the use of key words as well as
promises made by a firm in its IPO prospectus and its underpricing level.
Chapter four (paper three) analyzes valuation effects around the announce-
ment date of SEOs by US-REITs after the subprime crisis. It is expected that
higher asymmetric information will lead to stronger price changes, albeit declin-
ing in magnitude over time. The results of our empirical investigation are con-
sistent with these expectations. We find announcement effects of approximately -
3%, which are greater in magnitude than previous research would suggest. Fur-
thermore, our regression analysis confirms the decreasing effect over time.
Chapter five concludes the dissertation and gives an analysis of our main re-
sults. It also discusses room for further research in the economic literature on
REIT IPOs and SEOs.
2 IPO Underpricing in the Real Estate Industry:
Analytical Review of the Literature
2.1 Introduction
Capital structure and the various options of raising capital have continuously
been a research topic in the real estate literature. Especially initial public offer-
ings (IPOs) have raised a lot of research attention due to the fact that the decision
and the process of going public is a major step of any corporation.
Literature typically documents as advantages and major reasons of being a
publicly traded company among others improved access to capital and increased
liquidity (e.g., Brau and Fawcett, 2006). Hence, being a public company gener-
ates various advantages for companies in the real estate industry. The raised
equity can be used for major investments and helps companies to act more inde-
pendently from banks and debt financing.
In particular, studying IPOs of REITs offers a remarkable research oppor-
tunity due to a number of motives. First, examining REIT IPOs could disclose
evidence which has not yet been studied. This might challenge present going
public theories and moreover challenge their applicability. Additionally, study-
ing IPOs of REITs allows mitigating cross-industry effects. Those effects are
typically apparent in comparable research on industrial companies. Hence, REIT
IPOs offer a promising opportunity to study the real industry where the issues of
managerial opportunism and asymmetric information can be prevented through
(a) significant regulatory constraints, (b) operating structure, and (c) the trans-
parency of the underlying real estate asset market. Lastly, it is an interesting
opportunity to analyze (under “laboratory” conditions) empirical results on IPOs
as the US REIT significantly changed during the past 25 years. Therefore, inves-
tigating IPOs of REITs might draw implications which could have importance
for the general corporate finance industry.
Amongst the first to study a substantial rise of the stock price on the IPO
date were Stoll and Curley (1970). High initial returns indicate that the firms
going public left significant amounts of money on the table and the analyzed
IPOs were considerably underpriced. The formerly described phenomenon of
first day opening price exceeding the offer price (underpricing) has been system-
atically observed in economic literature. Reilly (1973) – similar to Stoll and
Curley (1970) – found significant underpricing, too. Moreover, he reveals that
first day returns occur in both declining and rising equity markets. Ibbotson
(1975) confirms these results and investigates that if investors invest in initial

P. Radner, IPOs and SEOs in the US Real Estate Industry,
Essays in Real Estate Research 13, DOI 10.1007/978-3-658-17139-1_2
4 2 IPO Underpricing in the Real Estate Industry: Analytical Review of the Literature
offerings on a random, they apparently have a greater probability to profit from a

significant IPO performance rather than experience a loss due to a corresponding
share price fall. Further studies by Lowry, Officer, and Schwert (2010) and Ritter
(1984) find that initial returns tend to correspond to the fluctuation of IPO cy-
cles. Underpricing is likely to be lower in “cold” and higher in “hot” market
periods. Moreover, it seems that IPOs are repeatedly underpriced around the
world. Lowry and Schwert (2002) verify that the volume of IPOs is significantly
correlated with levels of initial returns. Underpricing tends to fluctuate across
various IPO waves. Hence, underpricing is a statistically significant, consistently
observed and global phenomenon.
This paper provides a thorough literature review commencing with the theo-
retical context of the underpricing phenomenon. A comprehensive analysis of
real estate related studies follows. Main focus is to distinguish between the vari-
ous theories and classify empirical IPO underpricing studies into these theories.
This paper also analyses the explanatory power of the IPO underpricing theories
in the REIT IPO context and discusses findings of major studies. The paper con-
cludes with a summary of the key results.
The main findings suggest that it seems that lower underpricing is not only
consistent over time, but also across geographies. The evidence indicates that the
lower initial returns of REIT offerings apparently reflect the market. Moreover,
in addition to the REITs’ asset base underpricing is determined also by other
factors such as country-specific regulatory and market characteristics. The pre-
vailing overpricing of REITs which went public during the 80s is mainly due to
the fact that REITs were mostly sold to less-informed investors. There was no
information asymmetry between the various investor groups during that time.
Finally, we find that the winner’s curse model of Rock (1986) seems to have the
most explanatory power in the REIT IPO context followed by information ex-
traction theory, signaling as well as prospect theory.
2.2 Introduction
Underpricing – i.e. the offer price is lower than the share price of the first trade
at IPO – is a widely researched phenomena in the economic literature. Several
theories which try to explain underpricing exist. The most prominent ones are
asymmetric information theories. Further underpricing theories are institutional
theories and behavioral explanations.
Asymmetric information theories explain underpricing by assuming that one
of the parties, which are involved in the IPO (the issuing firm, the underwriting
bank, and the investors), is more informed than the others. Thus, these theories
base on the fact that IPOs are typically characterized by informational disparities
2.2 Introduction 5
between the issuing firms, underwriters, and investors. As a consequence, differ-

ent knowledge about the true value of the firm prevails between the different
parties and this leads to the impression that the IPO price does not reflect the true
value of the issuing firm but is significantly lower. Within the asymmetric in-
formation theory framework different explanations for the underpricing phenom-
enon exist. They can be subdivided into the “winner’s curse” explanation, the
principal-agent theory, the information extraction theory, and the signaling theo-
ry.
The adverse selection model of Rock (1986) assumes that some investors
are more informed about the true value of the offered stocks than another group
of investors. This results in a winner’s curse for the less-informed investors. In
underpriced offerings the demand of the less-informed investors is partly re-
placed by well informed investors, whereas in overpriced IPO offerings they
receive complete allocations. Hence, less informed investors obtain a dispropor-
tionally large number of overpriced shares. Moreover, the model suggests that
the extent of first day returns depends on the magnitude of information heteroge-
neity across various investor groups. Furthermore, Rock implies that even in the
case of substantial underpricing the demand of informed investor groups is not
great enough to cover the complete issue. According to Rock’s model the IPO
market can only function effectively, if uninformed investors participate in issu-
ances. Thus, in order to guarantee that uninformed investors in fact participate,
IPOs are systematically underpriced. This results in positive expected returns of
less informed investors. In a nutshell, the winner’s curse theory makes underpric-
ing necessary as it attracts less informed investors and thus secures the function-
ing of the IPO markets.
Beatty and Ritter (1986) extend the model of Rock (1986). They highlight
the relationship between the IPO firm’s fundamental risk and its extent of under-
pricing. The higher the risk – i.e. the higher the valuation uncertainty – the more
investors are willing to invest in information gathering about the firm. As a re-
sult, the greater the ex ante uncertainty about the true value of the IPO firm, the
greater the level of underpricing as investors expect to be compensated for their
investment in information. The compensation is given in the form of higher ini-
tial day returns, i.e. underpricing.
In general, there is an enormous amount of empirical evidence supporting
the model of Rock (1986) in variety of different sample natures. See, for exam-
ple, Koh and Walter (1989), Booth and Smith II (1986), Carter and Manaster
(1990), Levis (1990), Keloharju (1993), Michaely and Shaw (1994), Beatty and
Welch (1996), Carter, Dark, and Singh (1998), Dunbar (2000), Amihud, Hauser,
and Kirsh (2003), and Loughran and Ritter (2004).
Signaling theories, however, challenge the key assumption of the winner
curse model of Rock (1986). These theories assume that the issuing company has
superior information with regard to the true value of the firm – in contrast to the
assumption of Rock’s model that a group of outside investors has more and bet-
ter information than less informed investors and firm insiders. The first who
developed a signaling intuition on IPOs was Ibbotson (1975). Signaling theories
which base on Ibbotson furthermore assume that companies use underpricing
with the intention to signal the firm’s high value. Underpricing represents an
expensive and thus strong signal of company value and quality.
Grinblatt and Hwang (1989), Allen and Faulhaber (1989), and Welch (1989,
1996) have formalized Ibbotson’s intuition. Their main reasoning is that issuers
typically have an informational advantage towards investors as they have private
information about future cash flows and the general outlook of the company.
They show that it is not feasible for low quality companies to underprice their
issuing with the intention of imitating high quality firms since these firms face a
significant risk that the true value or nature of the firm will be disclosed follow-
ing the offering. Hence, the companies would not be able to offset the costs that
were caused by underpricing their offering through SEOs. In general, signaling
theories forecast a positive connection between underpricing and the speed, size,
announcement effect, as well as probability of secondary offerings. This also
holds true for ex ante uncertainty.
However, compared to other asymmetric information theories, signaling
theories seem to receive less empirical support. For example, the statistical rela-
tionship in the paper of Jegadeesh, Weinstein, and Welch (1993) is rather weak
and does not really support signaling theories although it confirms that the prob-
ability and size of SEOs increase with underpricing. This is in line with
Michaely and Shaw (1994). Their paper also shows that there is no statistical
relationship between the choice to engage in secondary offerings and to under-
price. Additionally, the analysis of Spiess and Pettway (1997) shows further
conflicting evidence. Contrary studies by Slovin, Sushka, and Bendeck (1994),
and by Francis, Hasan, Lothian, and Sun (2010), however contradict these re-
sults. These studies support the main reasoning behind signaling theory that
some companies are willing to leave money on the table so that they can later
regain the costs through SEOs.
Another asymmetric information theory bases on the assumption that
Rock’s (1986) model holds true and on the underlying theory that a group of
informed investors has superior information about the true company value than a
group of less informed investors. This is the so called information extraction or
bookbuilding theory.
If it is true that a group of investors exists which has high quality infor-
mation, underwriters and the issuing firm have a significant interest in extracting
information from this group. With this information they are able to increase the
offering price and thus to maximize the proceeds from the IPO. Yet, since inves-
2.2 Introduction 7
tors typically are not willing to reveal information, underwriters need to design a
mechanism, which extracts information and forces investors to disclose their
information with appropriate incentives. The major IPO models of Spatt and
Srivastava (1991), Benveniste and Wilhelm (1990), as well as Benveniste and
Spindt (1989) show that appropriately designed bookbuilding can be an adequate
mechanism for information extraction. The studies price an issue in a model
which can be described as a two stage auction process which potentially allows
them to effectively extract information and adjust the offer price. Nevertheless,
the underwriter still needs to underprice the issue as an investor incentive for
revealing information. Hence, according to information extraction theory, under-
pricing is a consequence of the intention to reward investors for truth telling.
Moreover, this theory shows that, if regulations do not allow underwriters to
discriminately allocate and price new issues, underpricing increases since non-
regulated bookbuilding is essential for the information extraction process.
Empirical evidence on the information extraction/bookbuilding process as a
reason for underpricing mostly supports this theory. Hanley (1993) indirectly
tests the model of Benveniste and Spindt (1989) and finds that issues with final
offer prices exceeding the limits of the offer range show larger underpricing than
other issues. Economic literature typically describes this evidence as the partial
adjustment phenomenon. Cornelli and Goldreich (2001, 2003) also back the
theory that underwriters use bookbuilding for information extraction purposes.
Further evidence that supports information extraction/bookbuilding theory
comes, for example, from Chemmanur, Hu, and Huang (2010), Binay, Gatchev,
and Prinsky (2007), Aggarwal, Prabhala, and Puri (2002), and Hanley and Wil-
helm (1995). In contrast, Jenkinson and Jones (2004, 2009) do not reveal any
evidence which would support this theory. Further analyses on information ex-
traction theories and IPO allocation include Chiang, Qian, and Sherman (2010),
Boehmer, Boehmer, and Fishe (2006), Sherman and Titman (2002), Ljungqvist
and Wilhelm (2002) Sherman (2000), and Lee, Taylor, and Walter (1999). Gen-
erally, empirical evidence on information extraction theory is relatively strong in
the literature.
Basically, Rock’s (1986) model as well as information extraction/book-
building theories assume that a group of investors is more informed than other
parties involved in the IPO whereas signaling theories assume that the issuing
firm has better information about the true value of the firm than other parties.
The principal-agent theory, however, assumes that the underwriting investment
bank has more and better information than the issuing firm and investors. The
first to model such a relationship were Baron and Holmström (1980) and Baron
(1982). The main conflict results from the fact that the issuing company is not
able to observe the effort which an underwriter employs for distributing and
marketing the issue without incurring costs. Therefore, the issuing firm typically
has to give incentives so that the underwriter optimally uses its superior infor-
mation about investor demand and by linking the underwriter’s compensation to
the offer price. Alternatively, the issuer could monitor the underwriter’s effort
which is costly. Simultaneously, the underwriter has to be discouraged from
underpricing the issue. This would reduce the bank’s efforts of selling the shares.
This conflict can be solved by a contractual relationship in which incentives for
the underwriter play a major role. However, Baron (1982) shows in his study that
such a contractual relationship still leads to underpricing. In this case underpric-
ing is necessary as it compensates the underwriter for revealing its information.
Moreover, the model implies that the higher the information asymmetry and the
higher the uncertainty about the value of the firm, the higher the demand for
underpricing and investment banking services. This backs the positive relation
between ex ante uncertainty as well as underpricing – a fact which plays a key
role in all asymmetric information theories.
Empirical evidence supports the principal-agent theory. However, the evi-
dence is not as clear as for the winner curse of Rock (1986) and bookbuilding
theories. For example, Ljungqvist and Wilhelm (2003) show evidence for the
hypothesis that monitoring reduces underpricing. In addition, Ljungqvist (2002)
tests the hypothesis that contractual relationships between issuer and underwriter
(i.e. contracting on higher commissions which are dependent on IPO proceeds)
reduce underpricing and finds support for this hypothesis. However, Muscarella
and Vetsuypens (1989) challenge the model of Baron (1982). They find that self-
underwritten IPOs show underpricing which would contradict Baron’s (1982)
model since in self-underwritten IPOs no information asymmetry exists. On the
other hand, Hsuan-Chi and Sheng-Hung (2010) contradict this finding by adding
issuers’ incentives into the regression model.
In contrast to asymmetric information theories, institutional theories de-
scribe underpricing as a phenomenon which is caused by actions of underwriters.
Moreover, institutional theories show that litigation avoidance and stabilization
activities can explain underpricing.
Subsequent to findings of Ruud (1993), Benveniste, Busaba, and Wilhelm
(1996) developed a theoretical approach with the intention to explain the rela-
tionship between price stabilization and underpricing. In their model they show
that the investment bank has a natural incentive to overprice IPOs and exagger-
ate interest of investors as the compensation of the investment bank rises with
the proceeds. Under such circumstances investors possibly will not cooperate in
the bookbuilding process. To incentivize investors, the investment bank can offer
stabilization measures. Since stabilization activities are costly and substantially
grow when the initial offering price exceeds the true value of the company, stabi-
lization is a bonding mechanism to convince investor groups of the fact that the
issuance is not purposely overpriced. As typically only institutional investors
2.2 Introduction 9
take part in the bookbuilding process, they are the key beneficiaries of price
support. In particular, the model demonstrates that compared to Benveniste and
Spindt (1989) stabilization measures lead to less underpricing as it enables un-
derwriters to increase the offering price when they commit to stabilization. Con-
trasting the approach of Benveniste, Busaba, and Wilhelm (1996), Chowdhry
and Nanda (1996) employ the model of Rock (1986) and illustrate that stabiliza-
tion significantly benefits less informed investors that are compensated for ad-
verse selection. Thus, stabilization decreases the problem of the winner’s curse
and by this underpricing.
Economic literature implies that stabilization is regularly applied in prac-
tice. The work of Hanley, Kumar, and Seguin (1993) as well as of Schultz and
Zaman (1994) investigate bid-ask spreads and provide market evidence for wide-
spread price stabilization. Those findings are furthermore supported by Ellis,
Michaely, and O’Hara (2000) and Lewellen (2006) by suggesting that underwrit-
ers execute considerable price stabilization activities. As far as the relationship
between underpricing and price support is concerned, the results of Ruud (1993)
are challenged by Asquith, Jones, and Kieschnick (1998). They do not reveal any
relation between price support and underpricing. Benveniste, Erdal, and Wilhelm
(1998) show that in stabilized offerings primarily large traders execute sell or-
ders. Since typically large traders are mandated by institutional clients this sug-
gests that stabilization measures mostly benefit institutional investors. In con-
trast, Lewellen (2006) finds in his study that underwriters engage in stabilization
activities more often than other banks when they own their own retail brokerage
operations. This supports the view that less or uninformed investor groups bene-
fit from stabilization activities. In general, stabilization seems to be a factor that
is able to explain underpricing patterns.
A second institutional theory usually is referred to as lawsuit avoidance the-
ory. The main principle of this theory is based on Ibbotson (1975). He shows that
underwriters underprice since they intend to reduce the risk of being sued by
various investor groups who are upset by the post-IPO performance. However,
lawsuit avoidance theory is more prominent in the US as a number of similar
studies illustrate that the risk of being sued is more or less irrelevant in other
countries (Ljungqvist, 1997; Kunz and Aggarwal, 1994). Nevertheless, lawsuit
avoidance seems to be a significant reason for initial returns, although locally
dependent. Tinic (1988) was one of the first who who analyzed the lawsuit
avoidance hypothesis. The researcher found that an IPO sample during the years
1923-1930 was less underpriced than an IPO sample during the years 1966-1971.
This was in line with Tinic’s expectations due to the fact that underwriters were
largely protected against law suits prior to the 1933 Securities Act. However,
underpricing can change over time (Loughran and Ritter, 2004). Hence, it is not
possible to prove that the only factor for increasing initial returns was increased
litigation risk. Actually, the study of Drake and Vetsuypens (1993) causes even
more doubt on the results of Tinic as their IPO sample between 1972 and 1977
indicates lower underpricing than the sample of IPOs between 1923 and 1930.
Moreover, Drake and Vetsuypens (1993) study if there is a negative relationship
between underpricing and the risk of being sued. Hughes and Thakor (1992)
maintain such a relationship. The authors find that there is no difference in being
sued between overpriced and underpriced companies. This is not in line with
legal avoidance theory. On the contrary, Lowry and Shu (2002) show that com-
panies which have a greater probability of being sued typically engage in higher
underpricing and that an underpriced issue reduces the risk of being sued. Hanley
and Hoberg (2012) demonstrate in their study that issuers use strategic disclosure
and underpricing as potential hedging methods against the risk of litigation.
Additionally, to underprice IPOs seems to be an appropriate hedge in relation
with Section 11 lawsuits that are harmful to underwriters while strategic disclo-
sure effectively protects towards all types of lawsuits. The analysis above shows
the difficulties when examining the influence of the risk of litigation on under-
pricing.
A third prominent theory which tries to explain underpricing are behavioral
explanations. Three different behavioral explanation approaches are typically
referred to in the economic literature: information cascades, prospect theory, and
investor sentiment. Researchers that support behavioral explanations typically
argue that theories based on institutional factors and information asymmetry
cannot plausibly explain the magnitude of underpricing which is empirically
documented.
The IPO model of Welch (1992) is based on sequential learning and is the
first prominent study which tries to explain underpricing by including behavioral
factors into the IPO process. He assumes that underwriters cannot reach all in-
vestors simultaneously and have limited distribution channels, and thus demon-
strates that information cascades can develop during the IPO process. The con-
sequence of limited distribution channels is that underwriters need more time in
order to attract interested investor groups. Hence, later investors are able to ana-
lyze if an IPO offering is attractive or not. A successfully sold IPO in the first
stage apparently functions as evidence to subsequent investors that previous
investors had generally positive valuations of the stocks and the firm, which
typically motivates them to also invest. The reverse holds true if initial sales are
unsatisfactory. As a consequence, later investors in the firm condition their bids
on the bids of earlier investors. Hence, demand accelerates or vanishes quickly.
Since the behavior of early investor groups therefore determines the failure or
success of the issue, they have to be compensated for their earlier and “riskier”
actions by underpricing. In his study Welch (1992) moreover demonstrates that
information cascades and their effects are actually not negative for the issuing
2.2 Introduction 11
company, as they reduce asymmetric information between the issuing firm and
investors. The bid of earlier investors will not provide any information for later
bidders, if he relies completely on the information of the earlier bidder. This may
lead to an increase in proceeds of the issuer. As a matter of fact, the model of
Rock (1986) is not consistent with the model of Welch (1992).
Indeed, there is no support for the model of Welch (1992) in academic liter-
ature. Nevertheless, the work of Amihud, Hauser, and Kirsh (2003) presents
empirical evidence that is in line with the theory of Welch (1992). Their analysis
indicates the existence of negative as well as positive cascade effects. Other
studies provide support that sequential learning is a driver of IPO market cycles
(Lowry and Schwert, 2002). This means that investors seem to exhibit infor-
mation cascade effects and that individual investors, in contrast to institutional
investor groups, are affected by the performance of previous investments in
initial offerings (Chiang, Hirshleifer, Qian, and Sherman, 2011). Yet no clear
support exists to explicitly prove these effects. This makes the model of Welch
(1992) one of the least researched theories in IPO literature.
A different approach follow Loughran and Ritter (2002). They apply Tha-
ler’s (1980) concept of mental accounting and Kahneman’s and Tversky’s
(1979) prospect theory to explain underpricing. The respective studies demon-
strate that executives of issuing companies experience behavioral biases which
usually prevent them from worrying or being concerned about the fact that they
leave money on the table with an underpriced IPO. Moreover, managers have a
tendency to mentally offset wealth losses which result from initial day returns
against wealth gains on their retained shares which result from underpricing. The
company’s managers are typically satisfied with the underwriter and the perfor-
mance of the initial offering, if the perceived gains exceed the underpricing loss.
By implementing this approach, Ljungqvist and Wilhelm (2005) find that if
the CEO’s perception of the issue’s outcome is positive, he is less likely to
change underwriters for SEOs. Moreover, since underwriters can negotiate high-
er fees for SEOs, they seem to profit from this behavior. More research is needed
to further apply and develop prospect theory to IPOs, though the model seems to
have some explanatory power.
Investor sentiment explanations are a third theory within the construct of
behavioral explanations for underpricing in the economic literature. In their IPO
model Ljungqvist, Nanda, and Singh (2006) specifically assume the presence of
optimistic sentiment investors in a bullish market. Consequently, an issuer at-
tempts to maximize his wealth and tries to take advantage from the optimistic
and positive valuation of sentiment investors. The model illustrates that if the
underwriter allocates the stocks to institutional investors, the issuer achieves his
objective. The institutional investors will then resell the stocks to sentiment in-
vestors who arrive in the market over time. They sustain share prices at high
levels by not flipping the stocks immediately but rather restricting the availabil-
ity of stocks and keeping inventory. This leads to a surplus extraction from sen-
timent investors. The model suggests that if sentiment investors are existent in
the market, the issuer can realize a higher offer price. However, institutional
investors must be compensated for inventory losses. Those losses can arise when
the demand of sentiment investors ceases unpredictably and results in falling
share prices. Thus, the issue still needs to be underpriced. The investor sentiment
model moreover shows that the stock price drops back to the fundamental value.
This results in negative long-run performance. This is in line with the analysis of
Ritter (1991).
The fact that the IPO offer price can exceed fundamental value prove
Purnanandam and Swaminathan (2004) and thus confirm Ljungqvist, Nanda, and
Singh (2006). In their analysis they reveal a median overvaluation of 14% to
50% at time of IPO in the years 1980-1997. Another study of Ofek and Richard-
son (2003) found significant initial returns during the dotcom crisis, a time in
which institutional investors traded IPO stocks to very optimistic retail investors
following the issue of internet shares. The results of the previous study are sup-
ported by Dorn (2009). He highlights that retail demand in initial offerings is
mainly driven by sentiment. Cornelli, Goldreich, and Ljungqvist (2006) present
additional support which reveals evidence that institutional investor groups take
advantage of sentiment investors. Their study of the European grey market for
stocks shows that small investors are usually willing to pay prices that exceed
fundamental value. In general, the evidence notably supports the model of
Ljungqvist, Nanda, and Singh (2006). The model seems to be able to explain
both the existence of hot and cold IPO markets as well as underpricing.
2.3 IPO Underpricing in the Real Estate Literature

Among the first who investigated IPOs of REITs were Wang, Chan, and Gau
(1992). The authors claim that significant uncertainty about the value of REITs
prevails since REITs invest in infrequently-traded real estate assets. Moreover,
most REITs do not disclose which real estate assets they plan to acquire with the
IPO proceeds in their IPO prospectus. Therefore, the researchers argue that REIT
IPOs typically have a greater level of uncertainty compared to IPOs of industrial
firms. According to IPO theories, greater uncertainty implies greater underpric-
ing and thus REIT IPOs should experience considerable underpricing. However,
the authors found no underpricing evidence in their study of 87 US REIT IPOs
between 1971 and 1988. In fact, the study finds that REIT IPOs are actually
overpriced. They highlight that overpricing is significant as well as consistent
across all subsamples. Furthermore, by employing Carter and Manaster’s (1990)
2.3 IPO Underpricing in the Real Estate Literature 13
underwriter ranking system, Wang, Chan, and Gau (1992) show that a negative
relationship between underwriter reputation and the magnitude of overpricing
exists. This evidence suggests that more reputable underwriters tend to price
REIT IPOs more accurately. Moreover, the results indicate that underpricing is
lower if REITs are floated via a best effort agreement, or if IPOs are conducted
by Equity REITs. The results are not consistent with Ritter’s (1987) findings,
who shows that best efforts IPOs have higher initial returns than firm commit-
ment underwriting agreements. Additionally, the authors find that usually institu-
tional investors do not overpay for initial offerings of REITs. IPOs that are over-
valued are typically marketed to less informed retail investors.
In contrast to this study, the researchers Below, Zaman, and McIntosh
(1995) argue that REIT offerings should not experience first day returns as the
valuation of REIT assets leaves no room for uncertainty. Their sample consist of
58 US REIT offerings during the years 1972-1988. They find a rather low un-
derpricing of -0.89% (in fact overpricing), that is in line with the results before.
A further analysis of a Mortgage REIT subsample reveals that overpricing disap-
pears if you use ask prices or the means of bid and ask prices for calculating
initial returns. Therefore, investors are indifferent between buying Mortgage
REIT stocks on the initial offering or in the immediate aftermarket. Hence, the
authors argue that MREIT IPOs are priced correctly. Apparently, they do not use
bid prices to calculate initial return. Bid prices, however, are used in the study of
Wang, Chan, and Gau (1992) and IPO literature overall. Below, Zaman, and
McIntosh (1995) argue that due to the fact that it is not possible to sell IPOs
short, investors could only profit from an overpriced IPO market if they wait to
buy new stock until the share price has decreased in the IPO aftermarket. Thus,
the returns due to overpricing in the study of Wang, Chan, and Gau (1992) seem
to be driven by calculating initial returns employing bid prices. The earlier rea-
soning of using bid-ask averages or ask prices as an alternative of bid prices is
doubtful. Basically, the key assumption behind calculating underpricing is that
investors sell the IPO stocks within the first trading day. However, Below, Za-
man, and McIntosh (1995) generate confusing results by dropping this concept.
Using bid-ask averages and ask prices demonstrates if and how investor groups
can profit from overpriced issues. However, it does not demonstrate if investor
groups exhibit negative or positive underpricing implying a mispriced offering.
Thus, the key outcome of the study seems to be doubtful.
Further evidence regarding the pricing of REIT IPOs provide Ling and
Ryngaert (1997). In contrast to the studies before, which use pre-1990 data, they
take a sample of 85 US Equity REIT IPOs between the years 1991 and 1994. In
the early 1990s, REITs turned into fully integrated operating companies (from
more or less passively managed portfolios before). The researchers assume that
compared to REIT IPOs of the pre-1990 era, offerings after 1993/1994 have a
greater level of valuation uncertainty. As highlighted before, greater uncertainty

leads to higher initial returns. Ling and Ryngaert’s (1997) study shows a signifi-
cant underpricing of 3.6%. This is in line with current theories on IPOs. They
moreover show that underpricing differs significantly with the level of under-
writer reputation (using an underwriter ranking system adopted from Carter,
Dark, and Singh (1998)) by revealing that IPOs completed by reputable under-
writers show less underpricing. Furthermore, they find that higher institutional
involvement leads to higher underpricing. Another result relates to the leverage
of REITs. Higher leverage appears to negatively affect underpricing. The re-
searchers conclude that highly leveraged REITs typically experience limited
growth potential and are hence easier to value. Lastly, Ling and Ryngaert’s
(1997) analyze that IPOs from the beginning of the sample period experience
higher underpricing in comparison to later offerings. A possible reason is that
investors acquire information when more offerings take place which leads to
more valuation certainty and thus lesser first day returns.
Buttimer, Hyland, and Sanders (2001) analyze 205 US REIT offerings
(1980-1999). Their sample is structured into three sub-periods. This allows the
authors to analyze the findings of Ling and Ryngaert (1997) and Wang, Chan,
and Gau (1992). For all three sub-periods they find significant mean initial re-
turns. For the period 1980-1988 the initial return totals -1.61%, and confirms
overpricing for that period. However, the initial returns between 1990 and 1994
as well as 1994-1999 are positive, amounting to 2.70% and 3.87%, respectively.
Chan, Erickson, and Wang (2003) obtain similar results. In their study REIT
IPOs experienced underpricing of -3.1% and -3.1% (overpricing) in the years
1970 to 1979 as well as 1980 to 1989. However, REIT offerings were under-
priced by 2.4% during the period 1990 to 2000. These two studies are consistent
with the results of Ling and Ryngaert (1997) and Wang, Chan, and Gau (1992).
Buttimer, Hyland, and Sanders (2005) analyze in a further study if initial re-
turns fluctuate with IPO waves (defined as ten or more REITs go public). In this
case, higher IPO volume would trigger higher initial returns and vice versa. The
authors group their sample of 163 US EREIT IPOs between 1980 and 2001 into
three waves (1985, 1993-94, 1997-98). The first wave (13 offerings) shows un-
derpricing of -1.3% (overpricing). During the second (84 offerings) as well as
the third wave (30 offerings) the authors find underpricing 3.2% and 5.6%, re-
spectively. In times no IPO waves took place offerings show initial returns of -
0.5% (overpricing). Thus, underpricing seems to rise with issuance volume and
the frequency of initial offerings. In general, the findings show that change from
over- to underpricing took place during the period 1980 to 1990.
The evidence above is consistent with information asymmetry theories as
well as with the investor sentiment model by Ljungqvist, Nanda, and Singh
(2006). Nevertheless, Buttimer, Hyland, and Sanders (2005) interpret their re-
sults in a somewhat different way. They argue that the rather low level of under-
pricing of REITs might also be seen as evidence against investor sentiment and
information asymmetry theories; sentiment investors lead to stronger underpric-
ing than is in fact documented. The interpretation of such findings is difficult,
however. Assuming that REIT IPOs are more transparent than industrial firms
IPOs, the authors argue that REIT IPOs should exhibit lower initial returns as
they are associated with less uncertainty. Thus, there is no reason to assume that
REIT IPOs show similar underpricing as industrial firms. This is also true if
sentiment investors exist in the market. Although sentiment investors are overop-
timistic and non-rational, it is not reasonable to assume that sentiment investors
misprice REIT offerings similarly to industrial firm offerings since the uncertain-
ty level of REIT IPOs is substantially lower. Hence, sentiment investors are
over-optimistic, however they are not unintelligent. Nevertheless, a market with
a lot of sentiment investors should experience stronger underpricing in compari-
son to an IPO market without sentiment investors. Yet, Buttimer, Hyland, and
Sanders (2005) do not control for uncertainty and thus it is difficult to compare
underpricing across market periods and industries.
Since all studies above analyze REIT IPOs alone, the studies do not include
a direct comparison between REIT offerings and industrial firm offerings. With a
sample of 209 REIT and 5,397 traditional IPOs during the period 1986-2004
Dolvin and Pyles (2009) try to fill this gap. They argue that REIT offerings are
more transparent compared to traditional firm IPOs and should thus show less
initial returns. In fact, their results prove this hypothesis. Offerings of industrial
firms are underpriced by 22.9%, whereas REIT offerings experience a mean
initial return of solely 3.7%. Interestingly, the authors also find that REIT IPOs
experience smaller price revisions prior to the IPO. Hanley (1993) demonstrates
that greater price revisions imply a higher level of uncertainty; hence, a positive
relationship between initial returns and price revisions exists. On this basis, Dol-
vin and Pyles (2009) give further evidence that investor groups typically experi-
ence less uncertainty around IPOs of REITs. Moreover, a regression of under-
pricing of the sample versus several factors reveals that offerings of REITs
exhibit first day returns of 4.6% less than traditional offerings.
Joel-Carbonell and Rottke (2009) exclude in their study all pre-1990 issues.
Their sample of 90 REIT IPOs during the period 1991-2008 discloses similar
results. The market-adjusted initial return is significant and totals 4.3%. It seems
that larger IPOs are more underpriced than smaller issues. Moreover, the sample
gives evidence that more reputable underwriters (using an underwriter ranking
adopted from Loughran and Ritter (2004)) are associated with less underpricing,
consistent with previous findings. In general, the analysis shows that underpric-
ing seems to be relatively stable since 1990 and that the overpricing phenomenon
disappeared.
The study of Bairagi and Dimovski (2011) is one of the most recent anal-
yses regarding the pricing of REIT IPOs. The researchers examine 123 REIT
IPOs in the US between 1996 and 2010 and thus cover the global financial crisis.
They expect initial returns to be stringer in bullish markets. Regarding the finan-
cial crisis, that is associated with a high level of uncertainty, the researchers are
not clear on the phenomenon of initial return patterns. A further factor includes
the interest rate of 10-year treasury securities that has shown a negative drift
after the financial crisis, too. Ling and Ryngaert (1997) claim that low yields on
fixed-income investments are triggered by falling interest rates in treasury secu-
rities. This results in a relatively higher attractiveness of securities of real estate
firms. Their evidence shows, in fact, that the activity of REIT IPOs is correlated
with the 10-year Treasury bond yield. IPO volume
Similar evidence provide Bairagi and Dimovski (2011). Initial returns
amounted to 4.7% between 1996 and 1999 and averaged at 3.4% from 2002 to
2006. IPOs of REITs were overpriced by -1.19% during the financial crisis
(2007-2010). This is the first time that the overpricing phenomenon could be
observed in the modern REIT era. This might be explained by the fact that the
subprime crisis led to lower investor confidence regarding REIT offerings in this
period. In general, the analysis support the view that initial returns were higher in
the 1990’s and decreased later on. Furthermore, the authors show that larger
IPOs experience more underpricing. Moreover, they illustrate that underpricing
is negatively correlated to underwriter reputation. Both findings are in line with
the findings of Joel-Carbonell and Rottke (2009) as well as other studies. The
results also indicate that higher fees of underwriters are associated with IPOs of
higher uncertainty, which leads to higher underpricing. These results are con-
sistent with the study of Beatty and Welch (1996). The paper also supports the
findings of Ling and Ryngaert (1997) regarding the influence of the 10-year US
treasury rate, suggesting that interest levels have an impact on the demand for
REIT securities. In addition, one novel result concerns “intended use of pro-
ceeds”, a variable commonly used as a proxy for uncertainty in IPO literature
(e.g., Ljungqvist and Wilhelm (2003)). A further finding of Bairagi and Dimov-
ski (2011) relates to REITs disclosing in their IPO prospectus that they will fi-
nance working capital with their IPO proceeds instead of investing them to buy
new properties. Those REITs typically experience higher underpricing. Using
IPO proceeds to finance working capital, however, causes doubts on the financial
stability of the REIT and results in increasing uncertainty. In addition, the paper
supports the view that initial returns peak in times of IPO waves. This coincides
with bullish market patterns – described in the study of Helwege and Liang
(2004). Finally, Bairagi and Dimovski (2011) show that Equity REITs seem to
experience more underpricing than Mortgage REITs and that REITs, whose
investment focus are property types which require more active management
(e.g., industrial and office), show higher underpricing.
The evidence described before show that IPOs of REITs experience under-
pricing that is significantly lower in comparison to industrial firm IPOs. More
precisely, REIT IPOs show average initial returns between 1% and 5%, whereas
traditional IPOs are, on average, underpriced by more than 10%. Moreover, it
seems that this pattern cannot only be observed in the USA but underpricing of
REITs is lower also in other countries, such as Australia and Japan. It will be
interesting to analyze if this conclusion also holds true in further emerging REIT
industries and is supported through additional evidence in those developing
REIT regimes. Since the underpricing of REITs has never been higher than the
underpricing of industrial companies during the last 30 years, it can be assumed
that lower underpricing is consistent across geographies as well as over time. It
seems, as suggested by above evidence, that the lower underpricing of REIT
offerings reflects market fundamentals.
Table 1: Average underpricing of industrial firm IPOs

Authors Sample size Sample Mean initial
(# of IPOs) period return
Hanley and Hoberg (2012) 2,112 1991-2005 38.5%
Riiter (2014) 2,661 1960-1969 21.2%
1,536 1970-1979 7.1%
2,375 1980-1989 6.9%
4,205 1990-1999 21.0%
1,790 2000-2013 22.3%
12,567 1960-2013 16.9%
Loughran and Ritter (2004) 1,982 1980-1989 7.3%
3,396 1990-1998 14.8%
803 1999-2000 65.0%
210 2001-2003 11.7%
6,391 1980-2003 18.7%
Habib & Ljungqvist (2001) 1,376 1991-1995 13.8%
Ellis, Michaely, and O‘Hara (2000) 306 1996-1997 11.0%
Krigman, Shaw, and Womack (1999) 1,232 1988-1995 12.3%
Carter, Dark, and Singh (1998) 2,292 1979-1991 8.1%
Ljungqvist (1997) 189 1970-1993 9.2%
Kunz and Aggarwal (1994) 42 1983-1989 35.8%
Drake and Vetsupyens (1993) 93 1969-1990 9.2%
Ibbotson (1975) 2,650 1960-1969 11.4%
18
Authors Sample size Sample period Mean initial return Result Initial return calculation
Table 2:
Wang, Chan, and Gau 87 IPOs 1971-1988 -2.82% Overpriced Linear initial return
(1992)
Below, Zaman, and McIn- 58 IPOs 1972-1989 -0.89% Overpriced Linear initial return
tosh (1995)
Ling and Ryngaert (1997) 85 IPOs 1991-1994 3.60% Underpriced Market-adjusted initial
return
Buttimer, Hyland, and 205 IPOs 1980-1999 2.00% Underpriced Linear initial return
Sanders (2001) 49 IPOs 1980-1988 -1.61% Overpriced
98 IPOs 1990-1994 2.70% Underpriced
Chan, Erickson, and 24 IPOs 1970-1979 -3.10% Overpriced Linear initial return
Wang (2003) 78 IPOs 1980-1989 -3.14% Overpriced
Average underpricing of US REIT IPOs
Buttimer, Hyland, and 163 IPOs 1980-2001 2.47% Underpriced Continous initial return
Sanders (2005) 13 IPOs 1985 -1.27% Overpriced
Joel-Carbonell and Rottke 90 IPOs 1991-2008 4.30% Underpriced Continous initial return
(2009)
Dolvin and Pyles (2009) 209 IPOs 1986-2004 3.72% Underpriced Linear initial return
Bairagi and Dimovski 123 IPOs 1996-2010 3.18% Underpriced Linear initial return
(2011) 48 IPOs 1996-1999 4.72% Underpriced
20 IPOs 2007-2010 -1.19% Overpriced
2 IPO Underpricing in the Real Estate Industry: Analytical Review of the Literature
An important question, however, is, if the REITs’ asset base – the real estate
holdings – is the key factor which causes reduced valuation uncertainty and leads
to lower underpricing. The review of literature on Propcos is helpful to answer
that question. Chan, Stohs, and Wang (2001) analyze 399 offerings in Hong
Kong during the period 1986 to 1997. In their sample the researchers include 343
industrial firm offerings and 56 real estate offerings. In contrast to the results
obtained on REITs, their study shows similar returns for both subsamples. The
researchers then split the real estate sample into 23 construction firms, 7 hotel
businesses, and 26 Propcos. Surprisingly, the 26 Propco offerings show the
strongest underpricing of about 19%. This is in line with the results on industrial
firm offerings. Hotel and construction offerings have initial returns of 3.0% and
16.5%, respectively. Chan, Stohs, and Wang (2001) argue that the asset base of
REITs cannot be the only reason for the low underpricing. Further analyses on
initial public offerings of Propcos show rather mixed results. In a review of 51
IPOs of Propcos in the UK during the period 1981-1994 Gerbich, Levis, and
Venmore-Rowland (1995) find, on average, an underpricing of 11.1%. A further
study of Sahi and Lee (2001) examines a sample of 48 Propco IPOs in the UK
from 1986 to 1995 and finds that the offerings show mean initial returns of 7.8%.
Brounen and Eichholtz (2002), however, analyze 54 French, Swedish, as well as
British Propcos that went public during the period 1984-1999. The authors find
that initial returns tend to vary across geographies. However, underpricing fluc-
tuates more or less insignificantly. Unexpectedly, they find that that the IPOs in
their sample were correctly priced in the era before 1992 (initial returns of 0.1%)
and show initial returns of 4.9% after 1992. Brounen and Eichholtz (2002) ex-
plain these results with the increasing integration of the market in Europe, which
started in the year 1992. A similar sample (1994-2006) of European Propcos
examine Freybote, Rottke, and Schiereck (2008) and compute underpricing of
7.3%. In particular, Propcos with an investment focus on Eastern Europe show
the highest initial returns (17.6%) while Propcos with a focus on Western Europe
and the UK experience initial returns of 5.9% and 3.4%, respectively. The evi-
dence given above clarifies that IPOs of Propcos show higher underpricing com-
pared to REIT IPOs. Thus, it seems reasonable to argue that REITs experience
less uncertainty around the IPO event in comparison to offerings of Propcos.
Moreover, the results suggest that underpricing is not only be determined by the
asset base of the REITs. It is also determined by additional factors, such as coun-
try-specific regulatory as well as market characteristics.
With the exception of Wang, Chan, and Gau (1992) all researches argue that
REIT IPOs show less underpricing since there is lower uncertainty around the
date of REIT offerings. A typical reasoning is that it is easier to forecast the cash
flows of REITs and therefore to calculate value of the firm due to the fact that
REITs typically invest in real estate asset assets and those assets commonly have
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Nitrogenous Foods
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that needed for growth and repair, is oxidized in the blood, yielding
energy and heat, and the waste is eliminated through the kidneys
and the bile. The red blood corpuscles, which are nitrogenous, are
broken down in the liver and discharged through the bile.
TABLE IV—ANIMAL FOODS
Water Protein Fat Ash Fuel Value Per
Carbohydrates
Food Materials Per Per Per Per Pound
Per Cent
Cent Cent Cent Cent Calories
Beef, Fresh 54.0 17.0 19.0 ...... O.7 1,105
Flank 54.0 17.0 19.0 ...... 0.7 1,105
Porterhouse 52.4 19.1 17.9 ...... 0.8 1,100
Sirloin steak 54.0 16.5 16.1 ...... 0.9 975
Round 60.7 19.0 12.8 ...... 1.0 890
Rump 45.0 13.8 20.2 ...... 0.7 1,090
Corned beef 49.2 14.3 23.8 ...... 4.6 1,245
Veal:
Leg cutlets 68.3 20.1 7.5 ...... 1.0 695
Fore quarter 54.2 15.1 6.0 ...... 0.7 535
Mutton:
Leg, hind 51.2 15.1 14.7 ...... 0.8 890
Loin Chops 42.0 13.5 28.3 ...... 0.7 1,415
Lamb 49.2 15.6 16.3 ...... 0.85 967
Ham:
Loin chops 41.8 13.4 24.2 ...... 0.8 1,245
Ham, smoked 34.8 14.2 33.4 ...... 4.2 1,635
Sausage:
Frankfurter 57.2 19.6 18.6 1.1 3.4 1,155
Fowls 47.1 13.7 12.3 ...... O.7 765
Poultry:
Goose 38.5 13.4 29.8 ...... 0.7 1,475
Turkey 42.4 16.1 18.4 ...... 0.8 1,060
Animal Viscera:
Liver (sheep) 61.2 23.1 9.0 5.0 ...... ......
Sweetbreads 70.9 16.8 12.1 ...... 1.6 ......
Tongue, smoked
35.7 24.3 31.6 ...... 8.5 ......
and salted
Brain: 80.6 8.8 9.3 ...... 1.1 ......
Fresh Fish
Bass large-
mouthed Black, 41.9 10.3 0.5 ...... 0.6 215
dressed
Cod steaks 72.4 16.9 0.5 ...... 1.0 335
Shad roe 71.2 23.4 3.8 ...... 1.6 595
Whitefish,
46.1 10.2 1.3 ...... 0.7 245
dressed
Preserved Fish:
Halibut, salted,
46.0 19.1 14.0 ...... 1.9 945
smoked and dried
Sardines, canned 53.6 24.0 12.1 ...... 5.3 955
Salmon, canned 59.3 19.3 15.3 ...... 1.2 1,005
Mollusks:
Oysters, solid 88.3 6.1 1.4 3.3 0.9 235
Round clams 80.8 10.6 1.1 5.1 2.3 340
removed from
shell
Mussels 42.7 4.4 0.5 2.1 1.0 140
Crustaceans:
Lobster, in shell 31.1 5.5 0.7 ...... 0.6 130
Crab, in shell 34.1 7.3 0.9 0.5 1.4 185
Shrimp, canned 70.8 25.4 1.0 0.2 2.6 520
Terrapin, turtle,
17.4 4.2 0.7 ...... 0.2 105
etc.
In the composition of meat, of course there is more or less fat,

varying from two to forty per cent, according to the animal and to the
condition at the time of killing.
It is possible to combine the fat and the lean of meat so as to meet
the requirements of the body without waste. About ninety-seven per
cent of the meat consumed is assimilated by the system, while a
large part of the vegetable matter consumed is excreted as refuse.
The compounds contained in the animal foods are much like those of
the body, therefore, they require comparatively little digestion to
prepare them for assimilation—this work having been done by the
animal—while the vegetable compounds require much change by
the digestive system before they can be used in the body.
Fish and sea foods are, many of them, rich in protein, as seen by
the above table. Note that sardines contain the largest proportion of
protein and next to these, shad roe.
There is a prevalent idea that fish is brain food. In so far as fish is
easily digested, it builds brain tissue, but no more so than beef, or
any food containing a goodly proportion of protein, easily digested,
absorbed, and assimilated.
Lobsters are difficult of digestion and they contain little nutrition, so
they are not valuable as a food.
Oysters, raw, are easier to digest than when cooked. Oysters
should not be eaten during the spawning season from May to
September.
Roasted flesh seems to be more completely digested than boiled
meat, but raw meat is more easily digested than cooked. Roasted
chicken and veal are tender, easily masticated, and easily and
rapidly digested in the stomach. This is one reason why the white
meats are considered a good diet for the sick-room, especially in the
case of stomach difficulty. Fat meats remain in the stomach a much
longer time than lean meats; thus, gastric digestion of pork, which is
largely fat, is especially difficult. Fried pork, in which the fat is heated
to a very high degree, is very difficult of digestion. (See page 197).
The chief objection to pork, however, is that hogs are scavengers
and live upon all sorts of refuse. Another objection is that in
preparing hogs for the market, the effort of the farmer is to force the
feeding and get them as fat as possible. This excess of fat may
result in degeneration of the meat tissue. The latter objection does
not hold, however, for hogs carefully fatted for home consumption, or
for hogs which run in the forests and live upon nuts, as do the beech
fed hogs of the south.
The best meats are from young animals which have been kept fat
and have not been subjected to any work to toughen the muscles.
Preserved and canned meats should be eaten with the utmost
caution, not only because of the inferior meat used in the preparation
of these foods, but also from the fact that they may become putrid
after being canned.
The proportion of albuminoids, gelatinoids and extractives in meat
vary with different meats and with different cuts of the same meat.
The albuminoids of meat include the meat tissue, or the muscle
cells. These constitute by far the greater part of the meat.
The gelatinoids are the connective tissue forming the sheath of the
muscle and of bundles of muscles, the skin, tendons, and the casein
of bone. Gelatines are made from these and, if pure and prepared in
a cleanly manner, they are wholesome.
Gelatin is distinguishable in rich meat soups, which jelly upon
cooling.
While the gelatinoids are not muscle, they keep the muscles from
being consumed when starches, sugars, and fats are lacking, and, in
this sense, may be considered more in the nature of carbohydrates.
The extractives consist of a substance within the lean meat,
known as creatin. This creatin is not a food; it is an appetizer, and
gives to cooked meats, broths, etc., their pleasing flavor. In case of
anaemia where it is necessary to build up red blood corpuscles, it is
desirable to have the patient take the blood of beef, the thought of
which is usually repellant, but it may be made very palatable if it is
heated sufficiently to bring out the extractives, or flavor, and then
seasoned.
Unless the beef extracts on the market contain the blood tissue in
addition to the extractives, they are not particularly nourishing and
are only valuable in soups, etc., as appetizers.
One reason why meat soups constitute the first course at dinner is
because the extractives stimulate the appetite and start the flow of
gastric juices. Bouillons contain no nourishment, because the
proteins have been coagulated by the vigorous boiling, but they may
be used as a basis for vegetables, rice, or barley to give them flavor.
The best method is to make one’s own soup from the connective
tissues (gelatinoids) and meat tissue.
Eggs consist chiefly of two nutrients,—protein,

Eggs and fat (ten per cent), combined with water,
phosphorous, and ash. Eggs are a wholesome
source of protein and are, therefore, classed as nitrogenous foods.
The fat and the iron are in the yolk, which is about one-third fat.
The yolk also contains phosphorous and some ash. The white is
practically free from fat but contains sulphur, phosphorous and a
very little ash. The white and the yolk contain almost equal quantities
of protein.
The white of the egg is said to be pure albumen; the chief ash
constituent is common salt. The total phosphorous in the white of the
egg is equivalent to about two per cent phosphoric acid and the total
phosphorous in the yolk is equivalent to one per cent.
The dark stain made by eggs on silver is due to the sulphur
contained in them. The iron in the egg is valuable to assist in building
red corpuscles.
The large part of the egg, as other proteins, is changed, mostly in
the stomach, into peptone, absorbed as peptone and then changed
back again into protein after absorption. That not digested in the
stomach is changed in the intestine, as is the case with other
proteins.
Eggs are, no doubt, excellent articles of food for nutrition and for
tissue building. They contain more water than cheese, but are more
concentrated than milk or oysters. They have practically the same
relative value in the diet as meat, and make a very good substitute
for meat. Egg yolk in abundance is often prescribed where it is
necessary to supply a very nutritious and easily assimilated diet.
One of the best methods of preparing eggs, which is especially
valuable for those having delicate stomachs or for those who need to
build up red blood corpuscles with the iron in the yolk, is in egg
lemonade or orangeade. Thoroughly beat the egg, add the juice of
half a lemon or orange, sugar to taste, and fill the glass with water.
The citric acid in these fruits partly digests the egg, changing it into
egg albumin,—the egg becomes limpid, no longer stringy. From this
condition the gastric juice quickly changes it to peptone.
Grape juice, cream, and cocoa may be used in place of lemon or
orange, in order to give variety where it is necessary to take many of
them, but the grape juice acid does not partially digest the egg as the
juice of the lemon does.
Eggnog is another means of taking raw eggs.
One method which any housewife can use to test the freshness of
eggs is to drop them into a strong, salt brine made of two ounces of
salt to a pint of water. A fresh egg will at once sink to the bottom.
After the third day the surface of the shell will be even with the
surface of the water and with increasing age they will rise still higher.
There is a prevalent opinion that if an egg is boiled hard it is
difficult of digestion, but this depends entirely upon the mastication. If
it is masticated so that it is a pulp before swallowed, a hard boiled
egg is digested as readily as a soft boiled one. If it is not thoroughly
masticated, then an egg should not be boiled longer than three to
four minutes, or should be put into boiling water and allowed to
remain in the water for six minutes without actively boiling. The latter
method cooks the egg through more evenly. Another method of
cooking the yolk evenly with the whites is to put the egg in cold
water, let it come to a boil, and then again immerse in cold water. Or
the egg may be put in cold water, let come almost to a boil, removed
from the stove, and let stand ten to twelve minutes in the hot water.
Any one of the last three methods cooks the white and the yolk
evenly.
Carbo-Nitrogenous Foods
Under this class come cereals, legumes, nuts, milk, and milk
products. In these foods the nitrogenous and carbonaceous
elements are more evenly proportioned than in either the
carbonaceous or nitrogenous groups. The different food elements in
this group are so evenly divided that one could live for a
considerable length of time upon any one food. Some animals build
flesh from nuts alone, while the herbivorous animals live upon
cereals and plants.
Under cereals, used by man for food, come

Cereals wheat, oats, rye, barley, rice, and corn. As will be
noted by the table below, cereals contain a large
proportion of starch and are therefore to be used largely for heat and
energy. Rice contains the largest proportion and next to rice, wheat
flour.
TABLE V—CEREALS
Carbohydrates
Water Protein Fat Per Starch etc. Crude Fiber Ash Per
Food Materials
Per Cent Per Cent Cent Per Cent Per Cent Cent
Wheat 10.4 12.1 2.1 71.6 1.8 1.9
Rice 12.4 7.4 0.4 79.2 0.2 0.4
Oats 11.0 11.8 5.0 59.7 9.5 3.0
Rye 11.6 10.6 1.7 72.0 1.7 1.9
Breads and
Crackers:
Wheat bread 32.5 8.8 1.9 55.8 ..... 1.0
Graham
34.2 9.5 1.4 53.3 ..... 1.6
bread
Rye bread 30.0 3.4 0.5 59.7 ..... 1.4
Soda 8.0 10.3 9.4 70.5 ..... 1.8
crackers
Graham
5.0 9.8 13.5 69.7 ..... 2.0
crackers
Oatmeal
4.9 10.4 13.7 69.6 ..... 1.4
crackers
Oyster
3.8 11.3 4.8 77.5 ..... 2.6
crackers
Macaroni 13.1 9.0 0.3 76.8 ..... 0.8
Flours and
Meals:
Flour, wheat 12.5 11.0 1.0 74.9 ..... 0.5
Corn Meal 15.0 9.2 3.8 70.6 ..... 1.4
Oatmeal 7.6 15.1 7.1 68.2 ..... 2.0
There is no part of the world, except the Arctic regions, where

cereals are not extensively cultivated. From the oats and rye of the
north, to the rice of the hot countries, grains of some kind are staple
foods.
“An idea of the importance of cereal foods in the diet may be
gathered from the following data, based upon the results obtained in
dietary studies with a large number of American families:—Vegetable
foods, including flour, bread, and other cereal products, furnished
fifty-five per cent of the total food, thirty-nine per cent of the protein,
eight per cent of the fat, and ninety-five per cent of the
carbohydrates of the diet. The amounts which cereal foods alone
supplied were twenty-two per cent of the total food, thirty-one per
cent of the protein, seven per cent of the fat and fifty-five per cent of
the total carbohydrates—that is, about three-quarters of the
vegetable protein, one-half of the carbohydrates, and seven-eighths
of the vegetable fat were supplied by the cereals. Oat, rice, and
wheat breakfast foods together furnished about two per cent of the
total food in protein, one per cent of the total fat, and four per cent of
the carbohydrates of the ordinary mixed diet, as shown by the
statistics cited. These percentage values are not high in themselves,
but it must be remembered that they represent large quantities when
we consider the food consumed by a family in a year.”[7]
If one’s work calls for extreme muscular exertion, the cereals may
be eaten freely, but if one’s habits are sedentary, and the cereals are
used in excess, there is danger of clogging the system with too much
glycogen, or converted starch. Indeed, for one whose occupation is
indoors and requires little muscular activity, a very little cereal food
will suffice; the carbohydrates will be supplied, in sufficient quantity,
in vegetables. Mineral matter is supplied in sufficient quantity in
almost all classes of foods.
The power of the system to throw off food, over and above the
needs of the body, is a wise provision of Nature, because where
foods are not supplied in the proper proportions, a more liberal diet
enables the system to select such foods as it needs from the
abundance.
Cereals and legumes supply nutrients cheaper than any class of
foods; therefore a vegetarian diet involves less expense than the
mixed diet. Meat, eggs and milk, which usually supply the proteins,
are the most expensive foods, and where these are eliminated, a
large proportion of proteins should be supplied by the legumes.
Wheat. Perhaps no food is as commonly used as wheat, in its

various forms. It is composed of:
First—The nitrogenous or protein compound, chiefly represented
in the cerealin and the gluten of the bran.
Second—The carbon extracts,—the largest contributor to the flour.
Third—The fats, occurring chiefly in the germ of the grain.
Fourth—The phosphorous compounds, iron and lime, found in the
bran.
The kernel of wheat consists of the bran or covering, which
surrounds the white, pulpy mass of starch within. In the lower end of
the kernel is the germ.
Flour. In the old time process of making flour the wheat was
crushed between stones and then sifted, first, through a sieve, which
separated the outer shell of the bran; then through bolting cloth,
which separated the white pulp from the inner bran coating. It was
not ground as fine as in the present process, thus the gluten,
phosphorous, and iron (valuable foods) were, in the old process,
nearly all left out of the white flour. The second bran coating, left by
the second sifting, was not so coarse as the outer shell but coarser
than the inner. Care was not formerly observed in having the grain
clean before grinding, the bran containing chaff and dirt, so that it
was not used as food but was considered valuable for stock and was
called “middlings.”
The modern process of crushing the wheat between steel rollers,
crushes it so fine that the white flour of to-day contains more of the
protein from the inner coat of the bran than the white flour of the old
process; hence, it is more nutritious.
Bran. Objection is sometimes made to bran because the cellulose
shell is not digested, but bran contains much protein and mineral
matter and, even though it is crude fiber, as stated above, this fiber
has a value as a cleanser for the lining of stomach and intestines,
and for increasing peristalsis, thus encouraging the flow of digestive
juices and the elimination of waste. In bread or breakfast foods, it is
desirable to retain it for its laxative effect.
The bran has three coats,—the tough, glossy outside, within this a
coat containing most of the coloring matter, and a third coat,
containing a special kind of protein, known as cerealin. The two
outer layers contain phosphorous compounds, lime, and iron. All
three coats contain gluten.
Of course there is more waste in bread made with bran and in
consequence, there is a smaller proportion of the nutrition in graham
bread. It is held by some, however, that more of the nutrition is
digested than in white bread.
Gluten flour is made of the gluten of wheat. It is a valuable, easily
digested food, containing a large proportion of protein.
Whole wheat flour does not contain the whole of the wheat, as the
name implies; it, however, does contain all the proteins of the
endosperm and the gluten and oil of the germ, together with all of the
starch. As a flour, therefore, it is more valuable than the white flour,
containing more nitrogenous elements.
Graham flour is the entire wheat kernel; with the exception of the
outermost scale of the bran. It contains the starch, gluten,
phosphorous compounds, iron and lime. It is the most desirable of
the flours because, containing the bran, it assists in digestion and
elimination, and the phosphorous, iron and lime are valuable for
body building.
Nutri meal is much the same as Graham flour, the chief difference
being that the bran is ground finer. The wheat is ground between hot
rollers, the heat bringing out the nutty flavor of the bran. It contains
all of the nutrition of the wheat.
Bread. As must be implied from the above, the “whole wheat,”
nutri meal, or graham flours are necessary if bread is to be a
complete food.
There is perhaps no form of prepared food which has been longer
in vogue. It has been known since history began. It probably
maintains and supports life and strength better than any single food.
The ease with which it is digested depends very largely upon its
porous condition. When full of pores, it is more readily mixed with the
digestive juices.
The pores in bread are produced by the effort of the gas, released
by the yeast, to escape. When mixed with water, the flour forms a
tenacious body which, when warm, expands under the pressure of
the gas from the yeast, until the dough is full of gas-filled holes. The
walls of the gluten do not allow the gas to escape, and thus the
dough is made light and porous. The more gluten the flour holds, the
more water it will take up in the dough, and the greater will be the
yield of bread; hence, the more gluten, the more valuable the flour. If
the bread is not porous, the fermentation is not complete, and the
bread is heavy.
Yeast is a plant fungus. In its feeding, the plant consumes sugar,
changing it into alcohol and carbonic acid gas. If the bread contains
no sugar the yeast plant will change the starch in the flour into sugar
for its feeding. Many housewives, realizing that the bread begins to
“rise” quicker if it contains sugar, put a little into the sponge. Unless a
large quantity of sugar is put in, the yeast will consume it and the
bread will not have an unduly sweet taste.
As the yeast causes fermentation, alcohol forms in the dough. This
is driven off in the baking. If the bread is not thoroughly done, the
alcohol continues to ferment and the bread turns sour. Bread is not
thoroughly baked until fermentation ceases. It is claimed that
fermentation does not entirely cease with once baking; this is the
basis of the theory, held by some, that bread should be twice baked.
The average housekeeper bakes an ordinary loaf one hour.
Time must be given for the products of fermentation to evaporate,
in the cooling of the bread, before it is eaten and it is not ready to eat
for eight to ten hours after baking. Hot or insufficiently cooked bread
is difficult of digestion, because it becomes more or less soggy upon
entering the mouth and the stomach, and the saliva and gastric
juices cannot so readily mix with it.
The best flour for bread is that made from the spring wheat, grown
in cooler climates, because it is richer in gluten than the winter
wheat. The winter wheat flour is used more for cakes and pastries.
Bread made from milk, is, of course, richer and more nutritious
than that made from water and bread made from potato water
contains more starch; both of these retain their moisture longer than
bread made with water.
Mould, which sometimes forms upon bread, is, like the yeast, a
minute plant. It is floating about everywhere in the air, ready to settle
down wherever it finds a suitable home. Moisture and heat favor its
growth, hence bread should be thoroughly cooled before it is put into
a jar or bread box and the bread box should be kept in a cool place.
Rye bread contains a little more starch and less protein than
wheat bread. It contains more water and holds its moisture longer.
Biscuits. The objection to eating hot bread, does not hold for
baking powder or soda biscuits, if well cooked, because these cool
more rapidly and they do not contain the yeast plant; hence, they do
not ferment as does the bread.
Baking powder is made from bicarbonate of soda (baking soda)
and cream of tartar. When these are brought in contact with
moisture, carbon dioxid is formed, and, in the effort to escape, it
causes the dough to expand and become light. The reason that the
cook attempts to bake her biscuits, or anything made with baking
powder as quickly as possible, after the baking powder comes in
contact with the moisture, is that the dough may have the full effect
of the expansion of the gas. If the room in which she mixes her
dough is cool, or if her biscuit dough is left in a cool place, this is not
important, as heat and moisture are both required for full
combustion.
Macaroni and spaghetti are made from a special wheat flour rich in
gluten known as Durum. They contain about seventy-seven per cent
starch, little fat and little protein. They may take the place of bread,
rice or potato at a meal.
Rice is a staple cereal in all tropical and temperate climates. It

requires special machinery to remove the husk and the dark, outer
skin of the kernel. It is seldom eaten within three months after
harvesting and it is considered even better after two or three years. It
requires thorough cooking.
Unhusked rice is called paddy.
Wild rice is used by the North American Indians. The seeds are
longer, thinner and darker, than the tame rice. It is coming into favor
as a side dish, but it is served more particularly at hotels in soup and
with game.
As previously stated, rice contains a larger proportion of starch
than any other cereal and the smallest proportion of protein. Next to
rice, in starches, comes wheat flour; yet whole wheat or graham flour
contain half as much again of protein.
Because of the quantity of starch in flour, potatoes and rice, it is
obvious that one should not eat freely of more than one of these at
the same meal, else the digestive organs will be overworked in
converting the starch into sugar and the liver overworked in
converting the sugar into glycogen and back again into sugar; and
the liver will be overloaded in storing it up. By far the best plan is to
eat but one cereal at a meal.
Rice contains no gluten, hence it cannot be raised in bread.
Corn (maize) is a native of America and has been one of the most
extensively used cereals. Corn bread and corn meal mush were
important foods with the early settlers, partly because they are
nutritious and partly because the corn meal was easily prepared at
the mill and was cheap. The germ of the corn is larger in proportion
than the germs of other grains, and it contains much fat; therefore it
is heating. For this reason, it is strange that corn bread is so largely
used by inhabitants of the southern states. It is a more appropriate
food for winter in cold climates.
Because of the fat in the germ, cornmeal readily turns rancid, and,
on this account, the germ is separated and omitted from many
cornmeal preparations.
Hulled corn, sometimes called lye hominy, is one of the old-
fashioned ways of using corn. In its preparation, the skin is loosened
by steeping the corn in a weak solution of lye, which gives it a
peculiar flavor, pleasing to many.
Cornmeal mush is a valuable breakfast food.
Pop corn. The bursting of the shell in popping corn is due to the
expansion of the moisture in the starch, occasioned by the heat.
Green sweet corn does not contain the same proportion of starch
as cornmeal, it being, in its tender state, mostly water. It is laxative,
because it is eaten with the coarse hull, which causes more rapid
peristalsis of the intestines.
The claims made for various advertised

Breakfast Foods breakfast foods would be amusing if they were not
intended to mislead. Nearly all of them have
sufficient merit to sell them, if the advertiser confines himself strictly
to the truth, but the ever pertinent desire to excel, which is one great
incentive to progress, leads to exaggeration. For example: Claim is
sometimes made that they contain more nutriment than the same
quantity of beef. Reference to above table does not bear out such
statement; they contain more starch but less protein. It is also
claimed by some advertisers that breakfast foods are brain and
nerve foods. The idea that certain foods are brain and nerve foods is
erroneous, excepting that any tissue building food (protein) builds
nerve and brain tissue as it builds any other tissue. There is a
prevalent idea that fish and celery are brain food, but there is no
scientific basis for the theory.
The grains commonly used for breakfast foods are corn, oats, rice,
and wheat. Barley, and wild rice, millet and buckwheat are used in
some sections but not enough to warrant discussion here. Barley is
used chiefly for making malt and pearled barley for soups.
The following table, from one of the bulletins published by the
United States Department of Agriculture, is interesting from an
economical standpoint.
Table VI.
Comparative cost of digestible nutrients and available energy in
different cereal breakfast foods.
Amount for 10 cents
Food Materials Price Cost Cost of Total Protein Fat Carbohydrates Energy
per of one 1,000 wgt. of
pound pound calories material
of of
protein energy
Oat
preparations:
Oatmeal, raw 3 0.24 1.7 3.33 0.42 0.22 2.18 5,884
Do 4 .32 2.3 2.50 .31 .16 1.64 4,418
Rolled oats,
6 .48 3.4 1.67 .21 .11 1.08 2,938
steam cooked
Wheat
preparations:
Flour,
4 .40 2.6 2.50 .25 .01 1.61 3,790
Graham
Flour, entire-
5 .46 3.1 2.00 .22 .03 1.36 3,188
wheat
Flour, patent 3.5 .35 2.1 2.86 .29 .03 2.10 4,700
Farina 10 1.12 6.2 1.00 .09 .01 .73 1,609
Flaked 15 1.69 9.3 .67 .06 .01 .46 1,005
Shredded 12.5 1.62 8.2 .80 .06 .01 .57 1,217
Parched and
7.5 .88 4.9 1.33 .11 .02 .94 2,050
ground
Malted,
cooked and 13 1.43 8.5 .77 .07 .01 .53 1,175
crushed
Flaked and
11 1.21 7.2 .91 .08 .01 .62 1,389
malted
Barley
preparations
Pearled
7 1.06 4.6 1.43 .09 .01 1.04 2,165
barley
Flaked,
15 1.83 9.6 .67 .05 .50 1,051
steam cooked
Corn
preparations:
Corn meal,
3 .44 1.8 3.33 .23 .06 2.48 5,534
granular
Hominy 4 .62 2.4 2.50 .16 .01 1.97 4,178
Samp 5 .78 3.0 2.00 .13 .01 1.57 3,342
Flaked and 13 1.73 7.5 .77 .06 .01 .60 1,335
parched
Rice
preparations:
Rice,
8 1.48 4.7 1.25 .07 .94 1,855
polished
Flaked, steam
15 2.31 9.8 .67 .04 .51 1,026
cooked
Miscellaneous
foods for
comparison:
Bread, white 6 .74 5.0 1.67 .14 .02 .87 2,009
Do 5 .62 4.2 2.00 .16 .02 1.04 2,406
Crackers 10 1.10 5.3 1.00 .09 .08 .71 1,905
Macaroni 12.5 1.08 7.5 .80 .09 .01 .58 1,328
Beans, dried 5 .28 3.5 2.00 .35 .03 1.16 2,868
Peas, dried 5 .26 3.4 2.00 .38 .02 1.20 2,974
Milk 3 .94 9.7 3.33 .11 .13 .17 1,030
Do 3.5 1.09 11.3 2.86 .09 .11 .14 885
Sugar 5 2.8 2.00 2.00 3,515
Do 6 3.4 1.67 1.67 2,940
The less expensive breakfast foods, such as oatmeal and

cornmeal, are as economical as flour, and, as they supply heat and
energy in abundance, as shown by above table, they should be
supplied in the diet in proportion to the energy required. They are
easily prepared for porridge, requiring simply to be boiled in water,
with a little salt.
For invalids, children and old people, breakfast foods prepared in
gruels and porridges are valuable as they are easily digested. All
should be thoroughly cooked so as to break the cells enclosing the
starch granules.
Predigested Foods. Some foods are claimed to be partly

digested and thus valuable for those with weak stomachs, but
breakfast foods are largely starch and the gastric juices are not
active in the digestion of starch. It is digested by saliva and the
ferment diastase in the intestines. (Diastase is a ferment of saliva
and pancreatic juice, which changes starch into dextrin and maltose,
in which form it is more easily acted upon by the intestinal juices.)
Experiments with “predigested” foods do not show a larger
proportion of dextrin, however, than would naturally be produced by
the heating of the starch, as these foods are being cooked at home.
The natural cooking at home makes starch more or less soluble, or
at least gelatinized. As a result of these experiments, therefore the
“predigested” argument is not given much weight.
Predigested foods, excepting in cases so weak as to be under the
direction of a physician, are not desirable. Nature requires every
organ to do the work intended for it, in order to keep up its strength,
just as she requires exercise for the arms or legs to keep them
strong. If an organ is weak, the cause must be found and corrected,
—perhaps the stomach or intestines need more blood which should
be supplied through exercise; or perhaps the nerves need relaxation;
or the stomach less food; or food at more regular intervals.
Another argument against predigested foods lies in the fact that
dentists hold that the chewing of coarse food is necessary to keep
the teeth strong. For this strengthening of the teeth, children are
given dry crackers and dry toast each day.
In the so-called “predigested” or “malted” preparations, malt is
added while they are being cooked. Malt is a ferment made from
some grain, usually from barley, the grain being allowed to germinate
until the ferment diastase is developed.
There is no doubt that a number of foods, containing malt are
valuable in the hands of physicians to assist in converting starch into
dextrin or sugar, where diastase is not formed in sufficient quantity,
just as pepsin is an aid in the digestion of protein,—but eaten
indiscriminately, there can be no question that it is more important for
the stomach and intestines to perform their natural work and thus
keep their strength through normal exercise.
While they are not “predigested,” as claimed, they are, as a rule,
wholesome and nutritious. They are cleanly, and made from good,
sound grain and they contain no harmful ingredients. Some contain
“middlings,” molasses, glucose and similar materials, but these are
in no way injurious and have value as foods. The dry, crisp, ready-to-
eat foods are especially advantageous because of the mastication
they require,—this mastication insuring plenty of saliva being mixed
with them to aid in digestion. A dish of such dry breakfast food, well
masticated, together with an egg, to furnish a larger proportion of
protein, makes a wholesome breakfast.
Cracked Wheat. In America wheat is seldom used whole. In

England the whole grain, with the bran left on, is slightly crushed and
served as cracked wheat or wheat grits.
Wheat is also rolled, or flaked, or shredded. The majority of wheat
breakfast foods contain a part of the middlings and many of them
bran. Farina and gluten preparations do not contain these, however.
The preparations of the various breakfast foods are a secret of the
proprietors. The ready-to-eat brands are cooked, then they are either
rolled or shredded, the shredding requiring special machinery to tear
the steamed kernels; later they are dried, and, finally packed,
sometimes in small biscuits. Many preparations are baked after
being steamed, which turns them darker and makes them more
crisp. Some preparations are steamed, then run through rollers,
while still wet, and pressed into flakes or crackers.
Oatmeals are the most nutritious cereals. The oat contains more
fat than other grains and a larger proportion of protein. It is,
therefore, the best adapted to sustain life in the proportion of nutrient
elements. On account of the fat, oats are especially well adapted for
a breakfast food in winter. Another advantage oatmeal, or rolled oats,
have as a breakfast food is in their laxative tendency, due to the
coarse shell of the kernel.

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IPOs and SEOs in the US Real Estate

Industry 1st Edition Philip Radner

Loopholes of real estate secrets of successful real

Real Estate Finance And Investments Bruggeman

Sustainability in Commercial Real Estate Markets 1st

The Cashflow Way to Invest in Real Estate Robert

Corporate Real Estate Management Thomas Glatte

Energy Efficiency and the Future of Real Estate 1st

Private Real Estate Markets and Investments 1st Edition

Real Estate Finance and Investments 16th Edition

IPOs and SEOs

IPOs and SEOs in the

PhD Thesis, EBS Business School, 2016

Essays in Real Estate Research

Library of Congress Control Number: 2017930959

Printed on acid-free paper

This Springer Gabler imprint is published by Springer Nature

List of Figures ........................................................................................ VII

2 IPO Underpricing in the Real Estate Industry: Analytical

3 Textual Analysis of REIT IPO Prospectuses: Quantifying

4 An Analysis of Announcement Effects of Seasoned Equity

4.2 Theoretical Background ............................................................ 39

5 Summary and Conclusion ............................................................. 55

Figure 1: Average cumulative abnormal return over the event window

Table 1: Average underpricing of industrial firm IPOs ................................. 17

1.1 Motivation and Problem Environment

1.2 Composition and Structure of the Dissertation

© Springer Fachmedien Wiesbaden GmbH 2017

© Springer Fachmedien Wiesbaden GmbH 2017

offerings on a random, they apparently have a greater probability to profit from a

between the issuing firms, underwriters, and investors. As a consequence, differ-

2.3 IPO Underpricing in the Real Estate Literature

greater level of valuation uncertainty. As highlighted before, greater uncertainty

Table 1: Average underpricing of industrial firm IPOs

Meat is almost all digested in the stomach by the

In the composition of meat, of course there is more or less fat,

Eggs consist chiefly of two nutrients,—protein,

Under cereals, used by man for food, come

There is no part of the world, except the Arctic regions, where

Wheat. Perhaps no food is as commonly used as wheat, in its

Rice is a staple cereal in all tropical and temperate climates. It

The claims made for various advertised

The less expensive breakfast foods, such as oatmeal and

Predigested Foods. Some foods are claimed to be partly

Cracked Wheat. In America wheat is seldom used whole. In

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