NEW YORK - Two mortgage real estate investment trusts halved their planned initial public offerings on Wednesday, casting a shadow on upcoming IPOs in the sector.
Colony Financial Inc and Apollo Commercial Real Estate Finance Inc had planned to price their IPOs on Tuesday but postponed the deals, which are now set to price after markets close on Wednesday.
Colony said in a regulatory filing Wednesday that it would sell only 12.5 million shares, rather than 25 million, for $20 each, raising an expected $250 million
Apollo said it would issue 10 million shares, instead of 20 million, also at an estimated price of $20 each.
Both companies were created to buy distressed mortgage assets. They may have faced weak demand because of the recent glut of similar mortgage REIT IPOs; two more plan to come to market in the next week.
People are assuming the market is unlimited, but institutions don't want to be overweighted in the sector, said Nicholas Schorsch, chief executive of American Realty Capital, a real estate advisory firm. The market doesn't have the capacity to absorb this many deals.
The two other mortgage REITs set to price in the next few days are Foursquare Capital Corp, due Thursday, and Ladder Capital Realty Finance Inc, due next week.
Schorsch said both could face the same investor reticence encountered by Colony Financial and Apollo Commercial.
A number of mortgage REIT IPOs have recently come to market, including Starwood Property Investment Trust and PennyMac Mortgage Investment Trust.
Because their shares are down slightly since the IPOs, there is little pressure on institutional investors to get in early on such deals, Schorsch said.
There is little fear of missing out on a first-day pop, he said. (Reporting by Phil Wahba and Christopher Kaufman; Editing by Lisa Von Ahn)