Real estate was the most active of all sectors last year for new public listings.
According to EY’s IPO Eye report, the sector made up 15% of all IPOs with REITs making up 90% of the offerings.
There were 10 IPOs which raised £1.8bn, up £1.1bn or 153% on the year prior when there were only four listings. This was helped by a flurry of long-income IPOs including AEW UK Long Lease REIT, LXi, Supermarket Income REIT and Warehouse REIT in response to institutional demand for long-dated income that provided a premium to the then low-yielding bond market.
Irish residential specialist Glenveagh Properties, which listed in Q4 2017 in both London and Ireland, was the largest IPO, raising £550m of capital.
Julie Green, real estate associate partner at EY, said: “The desire for long-term, stable returns from real estate has been the key driver for the increase in listing in 2017, which underpins the confidence that investors have in the UK market.”
EY predicts that regulatory changes from the FCA should bring about more real estate listings this year, which will clarify and enhance the listing process in ways that are beneficial to foreign companies seeking to list in the UK. According to the accountancy and advisory firm the biggest FCA changes relate to the timing of IPO documentation, which would be effective from 1 July, and the concessions for premium listings for property companies which became effective at the start of the year.
Helen Pratten, EY real estate partner, said: “Following these changes, we may see a wider range of real estate listings, aside from REITS. It remains important, however, for any business that wishes to list to understand the commitments and responsibilities of being a listed entity, as well as the opportunities it presents.”
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