After months of delays, the debut listing on the world’s first real estate stock exchange took place on Friday (May 14) – but probably not to the fanfare it was hoping for.
Mailbox REIT, owner of the Mailbox office complex in Birmingham, was floated on the International Property Securities Exchange (IPSX) after raising £25.85m – well below the £62.5m it was aiming for.
Having initially announced its intention to float last October and then pushing back the listing again in April, the exchange is finally up and running with its debut listing.
IPSX was established to enable the listing of individual properties (or multiple assets with commonality), giving investors access to individual property assets and a new way to invest in real estate.
The exchange, which is regulated by the FCA, had hoped to hold its first IPO in 2019, but uncertainty around Brexit and the general election – and, more recently, the COVID-19 pandemic – have delayed developments.
It was always going to be a tricky time to float a commercial property REIT, especially on a new exchange, but raising less than half of the target is not the ideal start for both the REIT itself and the exchange. There has always been a question mark around investor demand for the exchange, while the timing for this asset – being office led – wasn’t great given the flux that property sector is currently in.
The listing of Mailbox REIT was on the wholesale segment of the IPSX, which is only open to institutional and professional investors, a change from its original intention to list on the prime segment (that is open to both private and professional investors) back in October. This suggests to me that it struggled to find traction with private investors.
Nevertheless, for the future of the exchange, it was important to finally get going. With a second listing in the wings – Bridgewater Place House office building in Leeds, which is let to advisory group EY and multinational law firms DWF and Eversheds – momentum is building.
After an inauspicious start, the fundamentals of the exchange remain. Getting exposure to individual properties (as opposed to a portfolio of properties chosen by an investment manager, which is the norm for REITs) and building your own diversified portfolio is an exciting proposition.
An influx of properties (preferably some huge logistics schemes) and some bedding in time to prove the concept, and the IPSX could be a great addition to the investment armoury.
QD view – timid start for real estate stock exchange