EDITOR’S COMMENT It is never easy getting an IPO away, especially in uncertain times. So it was encouraging to see Home REIT raise more than £240m as it floated on the London Stock Exchange last week. It was a successful float on the same day that another IPO was shelved, citing “insufficient demand”.
Home REIT may not have quite hit its £250m initial target, but retail investors putting money into a real estate solution for one of the country’s biggest societal issues has got to be encouraging. Encouraging for real estate and encouraging for humanity.
It has, understandably, been a quiet year for IPOs. According to the latest data from the London Stock Exchange (which only has listings up until the end of September, so excludes Home REIT) just 15 have been successful this year, raising just less than £1.5bn.
But could we be about to see a surprising about-turn? Has it just been a case of the right proposal not being put in front of investors?
That certainly seems to be what the team behind the long-awaited launch of the first asset to be listed on the IPSX are seeing. This week the IPO of Mailbox REIT had to be delayed because of too much interest in the offer. The team at IPSX have been inundated and just cannot get through all the interest shown in the timetable they had set themselves, so are extending the deadline by two weeks. (As someone with more than 7,000 unread e-mails in her inbox, I know exactly how they feel.)
Having to do this, I’m told by those who have had a much longer career watching the markets than I have, is unusual – far more common is a delay to a listing timetable because the company has too little, rather than too much, demand. So perhaps this is just the tonic that real estate needs right now. An overwhelming number of retail investors who want to put their money in a retail, leisure and office asset in one of the UK’s biggest regional cities.
I for one will certainly be intrigued and excited to see how high the offering flies when the results are announced on 3 November.
What I continue not to be excited about, however, is the tactics being used by some retailers to breach their contracts and leave landlords stuck holding the baby.
This week, Edinburgh Woollen Mill sent its landlords a letter telling them that, ahead of its anticipated administration, it would be closing 50 of its stores within days and a further 100-150 over the next fortnight. Oh and that you, as landlord, won’t be claiming any lease liabilities will you? It is almost a templated letter now isn’t it? Same letter, different name on top.
But some landlords are starting to fight back. To say, “You know what, we will just have the keys back thanks.” Some are fighting back, saying “co-operation” works both ways, thank you very much.
There are, of course, two definitions of co-operation. It can be the act of working together with someone, or just doing what is asked of you.
I’ve said it before and I will keep saying it: government needs to start understanding the role of landlords in our economy. They are not a bottomless pit of money. They cannot bankroll poorly run businesses. Indeed, many of the UK’s landlords are small private investors, not huge sovereign wealth funds and private equity firms.
I know there are a growing number of landlords and their advisers out there that want to have their voices heard. Many of you have been in touch with ideas of how to do that. Please keep them coming. Together we can amplify the unheard voice of our nation’s shop owners.
To send feedback, e-mail samantha.mcclary@egi.co.uk or tweet @samanthamcclary or @estatesgazette
