Nov. 4 (Bloomberg) -- Aviv REIT Inc. became the second company in less than a week to postpone its U.S. initial public offering as the busiest period for new listings in two years leaves investors with the worst returns on record.

The real-estate investment trust that operates nursing homes in 21 U.S. states pulled its 16.6 million share IPO after it sought $17 to $19 apiece, according to Bloomberg data. The postponement came just five days after bankers were forced to shelve an $800 million offering by AEI after it couldn’t find enough buyers for the former overseas unit of Enron Corp.

Aviv and AEI were unable to complete their deals after 18 companies in the past two months used a more than 50 percent rally in the Standard & Poor’s 500 Index to offer shares. While sellers reaped $7.4 billion unloading stock, more than half of the IPOs since September have fallen below their initial price.

“The recent IPO experience is one more indication of wariness of investors,” said Michael Holland, chairman of New York-based Holland & Co., which oversees more than $4 billion in assets. “Whenever you have periodically negative returns, investors are twice shy.”

The U.S. company IPOs in the past two months have beaten the benchmark index for American equities by 0.5 percentage points in their first month of trading through yesterday, the worst performance in Bloomberg data going back to 1995. Thirteen of 18 companies are trading below their initial sale price, Bloomberg data show.

Great Expectations

IPOs by U.S. companies have beaten the S&P 500 by an average 21.3 percentage points since 1995, the data show.

Delta Lloyd NV, western Europe’s biggest IPO this year, dropped 3.2 percent in its first day of trading yesterday after London-based Aviva Plc raised 1.02 billion euros ($1.5 billion) selling shares of its Amsterdam-based insurance unit. The shares added 1.9 percent today.

Aviv REIT, based in Chicago, planned to use proceeds to repay debt and redeem stakes in an operating unit held by Chairman and Chief Executive Officer Craig Bernfield and co- founder Zev Karkomi’s estate, according to a regulatory filing.

Bernfield didn’t return a telephone call seeking comment. Karkomi died in September, according to an obituary published in the Chicago-Sun Times.

“It wasn’t meeting investors’ expectations in pricing,” said Joseph Betlej, vice president of St. Paul, Minnesota-based Advantus Capital Management, which oversees $18 billion. Betlej said he was approached about participating in the deal.

Enron Unit

New York-based Morgan Stanley and Citigroup Inc., and Charlotte, North Carolina-based Bank of America Corp.’s Merrill Lynch & Co. unit, are the lead underwriters for Aviv REIT’s IPO.

Morgan Stanley spokeswoman Mary Claire Delaney declined to comment, as did Citigroup’s Jeanette Volpi and Bank of America’s John Yiannacopoulos.

Goldman Sachs Group Inc., Citigroup and JPMorgan Chase & Co. in New York and Zurich-based Credit Suisse Group AG pulled an offering last week by AEI, a former Enron unit with $2.9 billion in net debt that operates power plants in Latin America and other emerging markets, after investors refused to pay the $16-a-share they sought.

The IPO had fallen to less than $300 million from $800 million after Ashmore Group Plc, the London-based fund manager that controls the company, withdrew.

“We have decided not to proceed with an initial public offering of our shares at this time due to market conditions,” George Town, Cayman Islands-based AEI said in a statement.

Hyatt IPO

Hyatt Hotels Corp.’s IPO of as much as $1.14 billion was moved to today from yesterday, two people familiar with the discussions said. Underwriters including Goldman Sachs, JPMorgan and Frankfurt-based Deutsche Bank AG are seeking $23 to $26 each for 38 million shares that the founding Pritzker family is selling, a regulatory filing showed. They also have an option to buy an additional 5.7 million shares.

The initial share sale would be the third-largest by a U.S. company on U.S. exchanges this year, Bloomberg data show.

IPOs evaporated in the fourth quarter of last year after New York-based Lehman Brothers Holdings Inc. filed for the world’s largest bankruptcy and spurred a credit-market freeze. The drought lasted until September as an average of two U.S. companies a month went public, the slowest pace since at least 1995, data compiled by Bloomberg show.

Offerings resumed after the U.S. government lent, spent or guaranteed $11.6 trillion to shore up banks and revive the economy.

LBO to IPO

The sales include those by private-equity firms, which are trying to exit some of the $1.4 trillion in deals they made in 2006 and 2007. New York-based Blackstone Group LP, the world’s largest private-equity firm, said last month that it’s planning to list as many as eight companies.

Returns for initial offerings have suffered as the S&P 500 fell last month for the first time since February.

If Aviv “came to market two months ago, they probably could have sold the deal,” said Samuel Lieber, the Purchase, New York-based chief executive officer of Alpine Woods Capital Investors LLC, which has $7 billion of assets. “The market has changed -- much more rapidly than the underwriting process.”

To contact the reporters on this story: Michael Tsang in New York at mtsang1@bloomberg.net; Rita Nazareth in New York at rnazareth@bloomberg.net

Last Updated: November 4, 2009 13:15 EST