Urban Exposure plans €630m IPO

Urban Exposure Real Estate has unveiled plans to raise £500 mln (€630 mln) in an initial public offering on the London stock exchange.

The company is to issue 50 million shares at a price of £10 per share with an over-allotment option of 10%. Urban has already received a binding commitment from US-based alternative asset manager EJF Capital which has pledged to invest £75 mln.

The newly-listed unit will be managed by Urban Exposure Investment Management, part of Urban Exposure Group. UE has been operating since 2009 and in the last 12 months has committed £476 mln of development finance on behalf of its joint venture partners to residential-led real estate projects in the UK. The UE Group currently has a pipeline of residential development finance opportunities valued at over £3 bn.

Urban Exposure Real Estate will invest in secured residential-led real estate development project loans, with a primary focus on projects in London and South East England. It will aim to generate a gross internal blended rate of return across the portfolio of 1% and will seek to achieve a blended portfolio loan to estimated gross development value ratio of 60%.

UE said it aims to deploy the proceeds from the IPO within the next 12 months, and added that the newly-listed arm will be the exclusive investment vehicle for the UE Group from now on. Trading is expected to commence during July 2014.

Commenting on the initiative, Malcolm Le May, chairman of Urban Exposure Real Estate said: 'With the expertise and extensive track record of the Urban Exposure group, we are well placed to take advantage of the financing void for real estate developers to raise funds. This financing gap in the UK is estimated to be at least £20 bn over the next three to five years.'

Deutsche Bank is acting as sole sponsor, global coordinator and nookrunner.

Ernst and Young is acting as independent financial adviser to the company.