Irvine Co. Lowers Price of Its REIT Shares : Investments: The change reflects the recent decline in the market. Firm also reduced its ownership stake.

IRVINE — The Irvine Co. late Tuesday set the price for its real estate investment trust at $17.50 a share--at least $2 less than the company had said earlier that it hoped to get.

Trading in the REIT is expected to begin today.

The REIT, called the Irvine Apartment Communities Inc., had expected to sell 10.6 million common shares priced between $19.50 and $21.50 apiece. Instead, the offering will be made at $17.50 a share, and 11.8 million common shares will be issued.

The change reflects a decline in the REIT market in recent weeks because of fears that interest rates will rise, combined with a rash of REIT initial public offerings.

To make up for the reduction in price per share, the Irvine Co. was forced to reduce its 65% ownership stake in the REIT to 61%, allowing more shares to be sold to the public.

“What’s happened here is there was a change in market conditions from when we originally filed our offering,” said Richard Moran, chief financial officer with the REIT. “We were responsive to market conditions. We’re quite pleased with it; we think it’s still a good deal for the Irvine Co. and a good deal for investors.”

The Irvine Co. had said it would raise $200 million by offering stakes in apartment properties to investors. Because the REIT is the first public venture by the privately owned Irvine Co. and one of the first to be made up of solely Southern California apartment properties, it has attracted much attention.

Craig Leupold, an analyst with Green Street Advisors, a Newport Beach firm that analyzes real estate securities, said the lower prices should spark more interest among investors when trading begins.

“I wouldn’t call the deal a success,” he said. “But I wouldn’t call it a failure either. They got the deal done, but not at the prices they wanted.”

At least one analyst said that, despite the price reduction, she would not purchase the REIT securities for her fund’s investors.

“I’m still not buying it because I don’t feel positive enough about the growth in Southern California, although that’s certainly a big change from their initial pricing levels,” said Jill Hollup, portfolio manager for the Liquidity Fund in Emeryville, which specializes in real estate securities.

Moran, however, argued that, although a negative perception about California real estate exists, the Irvine Co.’s REIT defies that.

“People were quick to distinguish Orange County from Southern California,” he said.