Who is involved?
Liberty Living is a wholly owned subsidiary of fund manager Brandeaux. It operates the 42 student residences in 17 towns and cities held in the Brandeaux Student Accommodation Fund.
Morgan Stanley is joint sponsor, joint global co-ordinator ?and joint bookrunner with ?Oriel Securities.
Why is the company listing?
The Brandeaux Student Accommodation Fund is an open-ended fund for retail investors. The fund suspended trading and closed to redemptions on 1 July 2013 after a wave of investors sought to exit the vehicle.
Fund manager Brandeaux plans to sell the £1.1bn portfolio and management company to Liberty Living, which will then become an internally managed student accommodation REIT.
Brandeaux can use cash from the sale to pay off investors who want to leave. Listing the vehicle will also provide a structure to facilitate future redemptions.
Where and when will it list?
Liberty Living plans to complete a listing on the main market of the London Stock Exchange this month. Following admission the company expects to become eligible for inclusion in the FTSE and EPRA indices.
Who are the directors of the new company?
Roger Boyland, founder and former executive director of Capital & Regional, and Brandeaux Student Accommodation Fund chief executive since 2002, will become executive director of the new company.
Charles Marshall, who joined Brandeaux as group financial director in July 2004 and became Liberty Living chief executive in January 2005, will be the new company’s managing director of operations.
Brandeaux’s Stephen Sheridan, who has been responsible for the financial management of the student accommodation portfolio, will be the chief financial officer.
Non-executive directors include Mall Fund chairman Sir Robert Finch, former Grosvenor Fund Management managing director Stuart Beevor, Andrew Murison, Gerry Murphy and Tracey Graham.
Liberty Living is to offer “not less than 50%” of its total share capital publicly. Why?
Not all investors want to exit the Brandeaux Student Accommodation Fund.
Liberty Living will offer at least 50% of the shares on the open market to raise money ?to allow Brandeaux to pay ?off investors.
It will pay for the balance in shares, which will be held by the Brandeaux fund as an investor in the REIT. This allows investors that did not want to exit the fund to retain their positions.
Offering at least 50% as a free float means that there will not be a controlling shareholder – something that could have put off incoming investors who want to buy shares in the company.
Who are the likely investors?
The listing has been structured as a global offer, and so is open to investors worldwide.
It is expected to appeal to institutional investors who invest in the main UK REITs.
Do we know the offer price for the shares?
Not yet. This information will be in the prospectus, which has yet to be published.
The net asset value of the business is £809m, reflecting a price of 277p a share, but initial shares could be offered ?at a premium – or discount – ?to this price.
What do we know about the new Liberty Living REIT?
The new company intends to position itself as a leading UK student accommodation income-oriented REIT with a £1.1bn portfolio, valued as at April this year.
It intends to declare a first-year dividend of 2.3p a share for the financial year ending 31 August, reflecting a two-month pro rata annualised dividend of 13.7p a share if it were paid for the full financial year. This is equivalent to a 5% yield on the adjusted EPRA NAV at admission of £809m.
The fund has had an average 99% occupancy rate over five years and generated £81.5m of rental and other income in the year to 31 August. The group’s balance sheet shows a look-through loan-to-value ratio of 24% and net debt of £274.9m.
Can we expect more student accommodation vehicles ?to list?
Yes. High-end London student accommodation provider Nido is also exploring options for the future of the company, which could lead to a flotation on the London Stock Exchange. The Round Hill Capital-owned firm is also looking at a refinancing or part-sale of the company.
Empiric Student Property has also announced plans to raise more than £110m from an IPO in London.
bridget.o’connell@estatesgazette.com
