The first of an expected fresh wave of IPOs is in the pipeline, with LudlowThompson reviving its plans for a UK residential REIT.
The London estate agency chain’s broker, Liberum, has put out a new research note on the proposed vehicle and is currently talking to potential investors.
A roadshow by LudlowThompson management will follow.
The firm plans to raise £100m through the float of LudlowThompson London Residential REIT. It would buy and let residential property in and around the capital.
Investment banks Liberum and Investec were working towards a listing on AIM in mid-April but did not progress plans as far as issuing an official intention to float.
It is understood that the small size of the initial vehicle and its listing on London’s junior market meant that it wasn’t of interest to “pure REIT” investors.
However, the new research note shows that plans for what will be the UK’s first true residential REIT are largely unchanged. It is targeting a total return on its net asset value of 8-10% a year over the long term.
Its gross rental yield remains 7%. Manager LudlowThompson Investment Management is set to receive a fee of 7% of gross rental income.
After a cooling of investor interest in real estate IPOs over the summer, renewed activity is expected in the market in the final half of the year – particularly after the Scottish independence referendum has taken place.
However, some advisers believe investors are more likely to be receptive to follow-on fund raisings by vehicles that already exist, rather than completely new ventures.
All parties declined to comment.
bridget.oconnell@estatesgazette.com
