Irish property firm Core Industrial REIT said on Tuesday that it intends to float on the London and Dublin stock markets, seeking to raise up to €250 mln to finance new acquisitions.
Core Industrial will place the shares at a price of €1 apiece, with trading expected to start in March.
Under the offering, majority shareholders Savile Row Sarl, York Capital Management Global Advisors intends to sell 18 million existing shares, therefore retaining a combined 9.9% interest in Core Industrial.
Core Industrial focuses on industrial properties, primarily in the greater Dublin area, and currently owns an under-rented portfolio of 108 industrial assets and 167 acres of land in Ireland, valued at €82.9 mln as at November 30, 2017, offering a net yield of 5.5%, with a potential reversionary yield of 9.9%.
'We are excited to create Ireland's first REIT aimed at capitalising on the attractive investment opportunities we believe exist in the Irish industrial property sector. The Existing Portfolio will offer an immediate source of income for Core and we intend to drive further income and capital growth in both that portfolio and the additional assets we expect to acquire following Admission. We look forward to using our experience and relationships in the industry to generate long-term value for shareholders,' said Chief Executive Officer Daniel Donovan.
Commenting on the announcement, Goodbody market analyst Colm Lauder said that the deployment of the funds raised may be challenging, given the relative small size of the Irish industrial market.
'The Irish industrials sector is small and tends to be of older stock. For purchasing assets this is a limited market with an annual investment turnover of <€200 mln,' said Lauder.
Also, the small lot sizes of the Core portfolio mean that these will predominantly be lower-grade older assets, at the sub-prime end of the industrial property market which has generally riskier tenancies and shorter leases.
'Targeting a dividend yield of 6% and total return of 12.5%+ which will go someway to compensate for the higher risk assets but it is questionable if the differential is sufficient,' said Lauder.
