Nov. 7, 2019
This article was written by Cathal McElroy, S&P Global Market Intelligence.
International Property Securities Exchange — a stock exchange solely focused on the trading of shares in real estate assets — expects to list its first properties by January 2020, CEO David Delaney said in an interview.
The exchange plans to list two U.K. properties, one owned by a U.K. real estate company and another by a U.S. investor, he said. Both assets will sell 100% of their shares to investors on the exchange.
"We're currently on an early-look process for two of the assets in our IPO pipeline," said Delaney, who was speaking earlier in October at the EXPO Real international property conference and exhibition in Munich. The listings had been scheduled for mid-December, but "the Brexit stupor may well push us into January as we expect the U.K. Listing Authority to take up to eight weeks to review the prospectus."
IPSX UK Ltd. has an IPO pipeline of 17 property assets, including one London asset that Delaney described as "iconic." Delaney declined to name the property. Most of the assets lined up to IPO are single assets, with others groups of assets that share a commonality, Delaney said.
IPSX is confident that it can attract a significant chunk of the U.K. commercial real estate market, which Delaney said was worth about £900 billion. "Roughly £30 billion per year trades in [U.K.] commercial real estate in deals above £50 million, which is our sort of target market. Is there any reason that we can't get 20% of that volume? I don't think so. I think that's very doable."
Delaney believes that IPSX's isolation of real estate from other listed equities will help investors get better value from the asset class. "Real estate is around 2% of the FTSE all share index," he said. "So realistically, it doesn't trade like real estate; it trades like equities. It gets pushed around by the S&P 500 and all of these sorts of things. What we see is an opportunity for real estate to trade like real estate, which is actually uncorrelated, relatively low volatility."
The exchange is already looking to grow beyond the U.K. Delaney was in Munich partly to progress discussions with German investors who might be interested in listing assets on a second IPSX exchange. "The German market is particularly attractive to us at the moment from an interest rate point of view, from a size of economy point of view, from a size of the commercial real estate market point of view," he said.
Germany's neighbouring markets are also of interest. "I'm very keen to start exploring opportunities within essentially Northern Europe to look at listing Northern European assets on probably an Amsterdam-based exchange," said Delaney.
IPSX Wholesale is a market exclusively for institutional and professional investors.