Mapeley, the Fortress-backed firm set up to bid for privatised UK public-sector property, says it will raise £100m from a share issue at the end of January.
The firm, which floated last year, will use the proceeds of the new sale to buy more office properties for high credit-quality tenants in the UK. It acquires property via a £300m revolving acquisition facility, using equity to pay off the debt.
With a property portfolio of more than £1bn, Mapeley invested £500m directly in office real estate last year – mainly to public sector and corporate clients. The average yield on these assets was 7.2%, with an average lease term of 8.8 years.
“Given the way they buy property, I would expect similar investments with a similar yield next year,” said a spokesman.
Mapeley was set up in 1999 to take advantage of the trend for UK government ministries to divest their real estate assets. Its two main contracts – covering 1,900 properties – are a sale-leaseback deal covering Abbey National’s retail and office properties and the 2001 Strategic Transfer of the Estate to the Private Sector (STEPS) deal with the Inland Revenue.
Under STEPS, the Inland Revenue will pay an annual £170m for facilities and property management for 20 years. At the end of that period, Mapeley will own the properties but the Inland Revenue will keep the right to remain in the buildings at market rates.
The new shares issued will represent around 14% of the firm’s share capital. After bookrunners’ underwriting commissions and fees, the firm expects to clear £96m.