Mailbox REIT has confirmed that it is cancelling the admission of its ordinary shares on the International Property Securities Exchange (IPSX) following news that the world’s first real estate stock exchange is closing.
Mailbox REIT, whose single asset is a mixed-use scheme in Birmingham, had already indicated it would quit the exchange on 5 September having received word from IPSX that it had started a winding-down process, and the closure of the facility was set for 4 December.
But in a follow up statement on Wednesday, Mailbox REIT said more by advising it would be exiting the REIT regime once it left IPSX. That differed from a previous statement suggesting it was finalising arrangements for listing and trading on an alternative platform.
IPSX is winding down after four years of operations. It dedicated itself to the IPO and secondary market trading of REITs owning single institutional grade commercial property or a group of similar assets.
Three companies listed – Mailbox REIT, M7 Regional E-Warehouse REIT, and BWP REIT - all three are M7 investments. In March this year, M7 said it was also planning to float M7 Box+ II fund in April to become the fourth company to list, but that never happened. Richard Croft, executive chairman of M7, is a backer of IPSX.
M7 acquired the Mailbox from Brockton Capital and Milligan in December 2019 and became the first to single property REIT to be listed on a dedicated property stock exchange in May 2021.
On Wednesday, Mailbox REIT said: ‘After careful consideration, the board has made the decision to cancel the admission of its ordinary shares to trading on IPSX and not to seek an admission on an alternative exchange for the time being.’
‘The board will write to shareholders shortly explaining its decision and the timetable for cancellation, with the intended cancellation to occur by mid-November.’
Crucially, the company is exiting the REIT regime upon its delisting from IPSX, as its shareholding structure will not qualify it for REIT status under the new REIT qualification rules which are expected to be introduced next year.
It explained: ‘The board has consulted with tax advisers and does not believe that the loss of REIT status will result in any material additional tax liability.’
‘As noted in the company's half year results announced on 29 September 2023, the loan secured against the Mailbox building remains in default as a full cure has not yet been achieved.’
‘The company is continuing to progress a number of avenues with its investment manager to resolve the issue, including a potential refinancing. The company remains in discussion with the lending syndicate.’
‘The Mailbox building continues to perform well at an operational level. As at 19 October 2023, rent collection remains strong at 94.42% for the September Quarter rents due, with occupancy at 96% of floor area overall.’
The unravelling of IPSX seems to have happened quickly. Only in February did the company reach another milestone when it said London-based law firm Howard Kennedy had been chosen as the latest approved lead advisor.
Those seeking admission to IPSX are required to appoint a lead advisor and legal advisor on IPSX transactions and other moves.
At the time, CEO Roger Clarke, said: 'The successful appointment of Howard Kennedy as lead adviser for IPSX represents another step forward for the exchange and highlights the growing number of Issuers who are seeking guidance on admission to IPSX.’
‘IPSX is growing as a capital markets venue for owners looking to fractionalise assets and investors seeking income-producing, institutional grade real estate. Issuers are searching for fresh avenues to release equity from their assets while still retaining flexible ownership. This is a challenge in the current economic climate but one IPSX can help with.’
BWP REIT was the last to begin trading on IPSX, doing so in January 2023 having raised £35 mln by way of placing ordinary shares – that turned out to the last of the three attracted to the platform.
The company was a newly established, externally managed, closed-ended investment company which owns the landmark Bridgewater Place office building in Leeds, the UK’s third largest regional metropolitan area and economy. The property comprises 234,711 ft2 of commercial office space and 15,587 ft2 of retail units, with approximately 8% of the total floor area currently vacant as at 30 August 2022.
Both Mailbox REIT and M7 E-Warehouse REIT were admitted to the exchange in 2021.
Executive chairman of M7, Richard Croft, had called IPSX a nascent capital market for real estate. In an interview in October 2023, he said: ‘When you’re trying to create something new, which we are, there will always be reticence. This journey has been a long time coming. But we are committed to it and we are now winning.’
‘The argument for why real estate should have single asset REITs and homogenised REITs is that it allows you direct access into real estate, which the traditional REITs generally don’t. You get exposed to management companies and a portfolio of assets you don’t control. With IPSX, you the investor get to decide. I personally think that’s a very positive development for real estate.’
