Another postponed listing of a new real estate company has underscored the difficulty of getting initial public offerings away in markets still roiled by Covid-19-driven uncertainty.
Responsible Housing REIT has paused plans for a £250m IPO on the London Stock Exchange’s Main Market, which had been scheduled for this week.
Canadian asset manager BMO had intended to raise funds to invest in supporting housing across the UK, with properties let to care providers on flexible and shorter leases.
The listing has been postponed rather than cancelled, according to a source, who said the company had received strong interest from potential investors but had encountered market volatility around recent events in the sector.
Civitas Social Housing REIT, a listed peer to the Responsible Housing REIT, has come under fire in recent weeks from short-seller ShadowFall. ShadowFall has criticised Civitas’s overall viability, with reliance on just two tenants for 40% of income, and queried claims that all rent is effectively 100% government-funded – a claim that Responsible Housing REIT has also made.
Since BMO announced plans to list Responsible Housing REIT, Civitas has lost close to 17% of its value.
At the time the listing was first announced, BMO lead manager Guy Glover told EG the REIT was a “fresh offering” that catered to a wider group of prospective operators.
“There are existing peer group funds out there and we wanted to do it differently, in a way which we feel shares the balance more evenly between the fund and the investors and also the registered providers who will be signing the leases,” said Glover.
“Because we are so well known in the investment trust world, to come up with a fresh offering made sense and it gave something where people get some diversity. For us, a new REIT entering the market is a sensible way forward and it plays to the strengths of each part of the business.”
The delay to Responsible Housing REIT’s listing comes less than three months after UK Residential REIT paused its own plans for a £150m IPO. The L1 Capital-advised company had aimed to float on the Main Market in mid-July and to build a portfolio of affordable PRS assets outside of London.
L1’s investment officer, Kee Gan, told EG earlier in the summer that the REIT would target £500m in gross asset value within two to three years, and £1bn in the medium term.
The last new REIT to list in London was Home REIT in October 2020. The company, which is building a portfolio of housing for the homeless, has already invested the £241m raised in its listing and last month completed an upsized £350m equity raise. Its shares are currently trading almost 10% above their IPO price.
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