Market. Underwriters(banks) work with management to determine a fair spo price when management desires fresh capital. The value of the offered shares at the spo is based upon the current market price and the price the underwriters are willing to pay and management is willing to sell.
Those shares are then offered to the public at a higher price than the discount negotiated between the aforementioned entities. The public then buys and sells those offered shares driving the market in the direction of the majority(buyers/sellers).
Height projection is a relative probability call. There are several hybrid REITs in this class. Those I define as similar book value and dividend. We have AMTG which pays .85 they just raised last Q so look for a good earning report, MTGE pays .90 and probably the very young king of a very young class, WMC which pays .85. and right now has the best value to price ratio going. MITT just raised to .77 and demonstrated exhuberance at one point. Those four are in my awareness as equals.
To make a call on how high it will go, the market supports the price of the king, so all the knaves have that potential if they demonstrate equal integrity. Any one that raised the dividend in the last quarter will have a reliable earning report. If it traded down more than the div amount since then, then we have an opportunity. MTGE has given me concern but every time I bought the dips I have been rewarded.
I sold all my NCT, the first to report, yesterday after a 5% jump. Now I will, as Doc says, layer in on wmc. This is a very low price for a company that behaves like an expert. The market earns my temporary gratitude to skittish human behavior.
Thanks to this board for keeping the conversations on investing.