M7-backed REIT plans IPSX listing of £229m e-warehouse portfolio

Taken from an article published in React News here: M7-backed REIT plans IPSX listing of £229m e-warehouse portfolio - React News

M7 Box+ REIT, a new investment firm, is seeking to have its shares traded on the wholesale segment of the International Property Securities Exchange (IPSX).

Once admitted, the firm will acquire a portfolio of seven leased e-warehouses from the M7+ II LP fund, which was valued at £228.9m as of 31 December 2022.

The listing will allow Jersey-based investors to benefit from investment in a UK vehicle that can offer liquidity and the advantages of the UK government’s REIT regime. Due to the nature of the transaction, there will be no fundraising exercise done upon admission.

The company will apply to become an REIT, with M7 Real Estate Financial Services to serve as alternative investment fund manager, and M7 Real Estate to act as asset manager for its property portfolio. Dickson Minto has been appointed as IPSX lead adviser.

M7 Box+ REIT expects admission and commencement of dealings to start in April 2023. Following admission, M7 will directly own around 4.69% of the company’s share capital.

E-warehouses

The company will target investments in the existing portfolio value-add e-warehouse assets across the UK, leveraging the anticipated occupier demand for last-mile logistics and warehouse space.

As defined by M7, an e-warehouse comes with enhanced planning uses, giving it flexibility to change its use in the future. These large industrial units may have retail frontages that could be converted to pure industrial use and provide good accessibility and sufficient car parking that could be repurposed into yard space.

Assembled by the M7 Group, the property portfolio of seven e-warehouses the new REIT seeks to acquire has a total leasable area of 811,712 sq ft and is let to around 40 occupiers. The properties generate a contracted rent of £16.2m per annum, of which 67.7% comes from the portfolio’s top 10 tenants.

Board leadership

M7 Box+ REIT is led by non-executive chairman Robert Gilchrist, who co-founded Rockspring Property Investment Managers in 2004 and became chief executive in 2008. The company, which reached €8bn of assets under management, was sold to Patrizia Immobilien in 2018.

He is joined by Kayte McLean and Tony Edgely. Edgely is currently a senior independent non-executive director at M7 Real Estate and had retired as a partner at Brockton Capital in 2018. McLean is a finance and operations expert at MGT Investment Management, and is the co-founder of GTO Partners where she also served as chief financial officer.

Richard Croft, executive chairman of M7, said: “The proposed admission of M7 Box+ REIT to IPSX wholesale further emphasises the platform’s ability to act as a capital markets alternative for property owners, being the fourth company to list on the exchange in two years..

“Despite Covid-19 and the current economic headwinds, well-located e-warehouses have demonstrated a consistent level of rental growth in recent years due to robust occupier demand, driven by continued e-commerce penetration and an increased focus from businesses on their supply chain. As such, we have identified an opportunity in this subsector, which offers substantial scalability potential in the UK, supporting our aim to provide shareholders with a sustainable level of income together with the potential for income and capital growth.”  

M7 Box+ REIT joins Mailbox REIT, M7 Regional E-Warehouse REIT and BWP REIT, which were admitted to trading on IPSX wholesale.

React News recently revealed that Croft is stepping down from his role as executive chairman at M7, with David Ebbrell to take full responsibility after a three-month handover period. Croft will remain in a senior adviser role and will continue to be part of the board of all M7 discretionary funds that manage external capital.