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  • Writer's pictureRealFacts Editorial Team

Special Opportunities REIT Withdraws London Listing Plans


London

Plans for the first real estate investment trust (REIT) listing on the London market in three years have been abandoned after failing to meet the minimum fundraising target. As reported by Paul Norman from CoStar News, Special Opportunities REIT will now implement its strategy in private markets instead.


Special Opportunities REIT aimed to raise £500 million through an initial placing, an offer for subscription, and cornerstone subscriptions of ordinary shares priced at 100 pence each. This would have been the largest REIT fundraise in a decade. Last month, commitments were secured from GoldenTree Asset Management, TR Property Investment Trust, and other Columbia Threadneedle investment funds, as well as the Bhavnani family office, totaling between £104 million and £119 million.


Despite what was described as "strong" investor demand, the REIT failed to meet the £250 million minimum required for the public listing to proceed. Management decided to execute its strategy using private capital instead of lowering the minimum fundraise, which they believed would not be in the best interest of investors given the market opportunity and pipeline.


The management team, including former LXi REIT Advisors colleagues Simon Lee, Freddie Brooks, John White, and Rob Ward, plans to acquire assets from the pipeline with private capital. The board includes notable non-executive directors such as Primary Health Properties founder Harry Hyman as chair and former Workspace chief executive Jamie Hopkins as senior independent director. At the initial public offering, the management team and non-executive directors had proposed to invest £4 million.


The team aimed to attract investors by highlighting a market characterized by structural oversupply. This condition has been driven largely by defined-benefit pension funds exiting their property holdings through open-ended funds and insurer "buy-outs," following a significant rise in the gilt rate over the last 18 months.


Special Opportunities REIT would have been the first property trust to join the London market since October 2021, following the £350 million AIM listing of Life Science REIT. Since then, no new launches have occurred, especially after UK real estate stocks suffered following the Liz Truss government's mini-Budget in 2022, which led to company share prices trading at steep discounts to net asset values.


The REIT's proposed listing was seen as significant given the absence of new property trust listings post-2022. The market has seen other planned listings, such as Independent Living REIT and GCP Co-Living REIT, being shelved due to unfavorable market conditions and geopolitical events like the Ukraine crisis.


While the failed listing is a notable event for the London market, Special Opportunities REIT remains focused on its strategy. By pursuing opportunities in private markets, the management team believes they can still capitalize on the structural market opportunities they initially targeted. Despite the setback, the REIT's strong investor interest and strategic direction suggest a continued commitment to growth and value creation in the real estate sector.

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