Sept. 18, 2020
This article originally appeared in Inside Housing magazine on 18 September 2020.
Registered providers are considering listing social housing assets on a new commercial property exchange that is due to be launched this year.
The IPSX system describes itself as the world’s first regulated securities exchange for trading companies owning single institutional grade real estate assets.
Investors will be given the chance to buy shares in a single building, like a tower block, unlike with real estate investment trusts (REITs) which hold larger and more diverse portfolios.
Roger Clarke, managing director and head of capital markets at IPSX, told Inside Housing: “We have a handful of transactions in the pipeline that we hope to get done this year including a portfolio of social housing.”
The platform received Financial Conduct Authority approval earlier this year but is yet to complete a transaction, though Mr Clarke expects the first one to be completed this month.
He added: “We are finding that a number of local authorities like that they can effectively let their tenants have a chance to invest in and have a stake in a local asset.
“It’s also a new source of finance. Some local authorities were already pushing at debt ceilings last year anyway and of course the Public Works Loan Board now has been taken away as an easy source of capital.
“It offers a way of using equity to raise funds as opposed to debt.”
Where REITs may cover multiple assets, IPSX will allow residential portfolios to be listed “as long as they have a degree of commonality”, Mr Clarke explained.
He clarified that these portfolios must be investment grade and added: “If you look at some of the bigger multi-family assets that are being built these days, a single tower for example, could be worth £180m – that is obviously of a commercial scale.”
Mr Clarke said the aim is to give investors a secure, asset-backed dividend stream.
Earlier this week, a new REIT was announced which aims to deliver an annual return of 7.5% from investments in homelessness accommodation.
IPSX Wholesale is a market exclusively for institutional and professional investors.