The UK Residential REIT has announced plans to raise £150 mln (€174 mln) in an initial public offering of its share on the London stock exchance.
With the IPO net proceeds, the company said that it intends to acquire a £145 mln seed portfolio of 28 properties, comprising 1,214 residential units across the UK and in particular in cities including Manchester, Sheffield, Leeds, Liverpool and Bristol.
The company, which focuses on affordable, residential properties outside of prime central London, has identified a £440 mln pipeline of further investment opportunities and expects the balance of the net proceeds to be invested within twelve months of admission.
The company is targeting a dividend yield of 5.5% per annum from 1 July 2022 once fully invested and a net total shareholder return of 10% per annum.
While dividends will be supported from rental income from the properties, the company also aims to target properties that provide scope for capital appreciation through active asset management initiatives including refurbishments and asset repositioning.
The REIT will be managed by L1 Capital, an independent global investment manager 100% owned by employees which has £2 bn in assets under management across five funds.?L1 Capital currently manages £230 mln in the UK.
Richard Grainger, non-executive Chairman of The UK Residential REIT, said: ‘The UK faces a critical shortage of good quality homes for rent, in particular those that are both affordable for the majority of the working population, and which are in well-connected regional city locations that are forecast to see population increases in the future. The rate of new build stock will never keep pace with this demand, which offers an opportunity for professional investors to take the lead by creating a good quality mass market product and delivering a solution to one of the most urgent issues facing society today. L1 Capital has a highly experienced management team who have delivered both rental and capital growth from the seed portfolio, providing evidence of the returns that can be achieved from investing in this segment of the residential market.’
