New investment firm worth £274m eyes Scottish commercial property scene ahead of stock market float
A real estate investment trust (Reit) with a heavy focus on Scottish commercial property is to be floated for the first time this week.
Two major asset managers have launched the property company which is expected to have a market worth of about £274 million when it makes its stock market debut on Friday.
Glasgow-based London & Scottish Investments and Toscafund, the investment manager chaired by Sir George Mathewson, former boss of Royal Bank of Scotland, have linked up to launch Regional REIT.
It will float at 100p per share on the London Exchange, with the offer of 80 million shares having been fully subscribed.
LSI is the asset manager of the trust, which has a property portfolio valued at £386m, while Toscafund Asset Management will act as the investment manager.
The Reit has 128 properties in its portfolio, of which 51 – valued at some £136.5m – are in Scotland.
Blue-chip institutions have backed the offer, which comes as LSI and Toscafund note that capital is moving back into the regions amid economic recovery.
Toscafund and LSI will each have a 23.5 per cent stake in Regional REIT, which will float with a 128-strong portfolio worth £386m. Fifty-one of its properties are in Scotland, including Tay House in Glasgow.
Regional REIT has a further £250m of potential acquisitions under review. It said its focus will be on acquiring and managing “high quality secondary commercial real estate” outside London.
LSI, which alongside Toscafund has invested in around £500m of assets, will handle property management for the new venture.
Chief investment officer Stephen Inglis, who is property director of London & Scottish Investments, said: “There is a structural lack of supply for quality office and industrial space in the major UK business areas outside of London – the areas showing the strongest signs of growth as the economy continues to improve.
“This, alongside our experience and knowledge of the market, presents us with an opportunity to create sustainable income and strong capital returns for our investors.”
He added: “This is great news for LSI, being appointed to run the property assets of Regional REIT.
“We have worked very hard to build up the portfolio from zero in June 2013 to 128 assets located throughout the main regions of the UK. These cities and regions are showing strong signs of economic growth, resulting in increasing demand for high-quality office and industrial space and, at the moment, supply does not meet that demand.”
Chairman Kevin McGrath, who also chairs M&M Property Asset Management, said: “The support this new Reit has received from both existing and new shareholders is very encouraging. We are delighted that a further high-quality list of blue-chip institutional investors has decided to come on board.
“This underlines our belief in the exciting prospects for regional commercial property in the UK, and is a reflection of the management team’s experience and expertise in this market.”