IPSX fills a gap in the commercial property investment landscape and gives a bespoke public market option for real estate owners and investors. It offers flexibility, liquidity, speed of execution, better access to investors, and more favourable valuation methods. Real estate investors of all types enjoy direct investment in income-producing institutional grade real estate, with the liquidity associated with the public markets.
Access to new real estate investors
Traditional IPOs on existing generalist stock exchanges are mainly targeted at professional institutional investors such as pension funds, insurance companies and hedge funds.
IPSX's regulatory status allows potential investors of all types, including those in the retail markets, to buy shares in IPSX issuers through brokers, retail platforms and wealth managers.
IPSX Issuer volumes will respond to the substantial gap in unsatisfied demand for the asset class.
Owners of real estate are usually faced with a limited set of choices – keep the asset, sell the asset entirely or enter into a potentially complex Joint Venture agreement with a new partner.
IPSX provides issuers with significantly more choice and flexibility. An Issuer can retain economic ownership of the underlying asset by retaining anything from 0%-75% of the shares in the company admitted to trading (subject to satisfying minimum free float rules).
Speed of execution
Average time to complete a private market asset sale in the UK is in the region of 6 months.
The process of selling shares to real estate investors by way of a real estate IPO on IPSX can be completed in as little as 8 - 12 weeks.
Market approach to valuation
Publicly quoted real estate in the UK held in a traditional fund structure has traditionally been valued by stock market investors against a reported Net Asset Value of the shares.
This approach does not accurately reflect the company's ability to generate cashflow to be paid to investors in the form of dividends and neither is it fully transparent.
Valuations focusing more on multiples of cashflow, rather than a view on the prospects for asset values, bring real estate more in line with other sectors of the stock market.
Issuers may be able to reconfigure their ownership of underlying real estate assets into corporate structures without incurring Stamp Duty Land Tax.
This reduction in tax payable on the transfer of the underlying asset may benefit both the current owner and the new shareholder.
Issuers can choose to bring the company admitted to trading on IPSX within the scope of the UK Real Estate Investment Trust (“REIT”) regime.
Managing Director and Head of Capital Marketsrclarke@ipsx.com