Government Properties Income Trust, based in Newton, Massachusetts, owns 29 properties, 25 of which are leased to the U.S. government and four are leased to the states of California, Maryland, Minnesota and South Carolina. The properties are located in 14 states and the District of Columbia.
Government Properties plans to make a quarterly cash distribution of 40 cents per share or $1.60 per share annually, which would yield about 7.62 percent, based on an initial public offering price of $21 per share, the mid-point of its filing range of $20 to $22 per share.
For a clue on what to expect in the aftermarket, let’s take a look at the last REITs to go public. Over the Last 100 IPOs that have been priced, dating back to Oct. 23, 2007, only three were real estate investment trusts:
- American Capital Agency (Nasdaq: AGNC), based in Bethesda, Maryland, is a REIT formed to invest in single-family residential mortgage pass-through securities and CMOs guaranteed by a U.S. government agency, such as the Government National Mortgage Association, also known as Ginnie Mae; the Federal National Mortgage Association, better known as Fannie Mae, and the Federal Home Loan Mortgage Corporation, better known as Freddie Mac. American Capital priced its IPO of 10 million shares at $20 each on May 14, 2008. Its IPO closed its opening day at $19.35 and closed on Friday, May 29, 2009, at $18.99, DOWN 5.1 percent from its initial offering price.
- Chimera Investment (NYSE: CIM), based in New York City, is a REIT formed to invest in residential mortgage-backed securities, residential mortgage loans, real estate-related securities, asset-backed securities and various other asset classes in the United States. Chimera priced its IPO of 33.3 million shares at $15 each on Nov. 15, 2007. Its IPO closed its opening day at $14.90 and closed on Friday, May 29, 2009, at $3.49, DOWN 76.7 percent from its initial offering price.
- Hatteras Financial (NYSE: HTS), based in Winston Salem, North Carolina, is a REIT formed to invest in adjustable-rate and hybrid adjustable-rate single-family residential mortgage pass-through securities guaranteed or issued by a U.S. government agency, such as the Government National Mortgage Association (Hello, Ginnie Mae) or a U.S. government-sponsored entity, such as the Federal National Mortgage Association, or Fannie Mae, and the Federal Home Loan Mortgage Corporation, or Freddie Mac. Hatteras priced its IPO of 10 million shares at $24 each on April 24, 2008. Its IPO closed its opening day at $24.68 and closed on Friday, May 29, 2009, at $24.92, UP 3.8 percent from its initial offering price.
Back to the Present
Government Properties Income Trust plans to price its IPO of 10 million shares at $20 to $22 each after the closing bell on Tuesday, June 2. It is expected to start trading on the New York Stock Exchange on Wednesday, June 3.
In view of the aftermarket performance of the last REITs to go public, don’t look for a moonshot opening-day pop from Government Properties’ IPO.
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