10 October 2017
Reporter: Theo Andrew

M7 Multi-let REIT to launch £300 million IPO

M7 Multi-let REIT is planning an initial public offering (IPO), with the intention of raising £300 million, to invest in regional light industrial and office assets.

The IPO will launch with an issue price of 100 pence per share and is subject to a minimum net proceeds of £147 million being raised. The REIT will apply for admission of its shares to trade on the main market of the London Stock Exchange.

Multi-Let REIT has already agreed to acquire 93 assets across two portfolios, Marble and REIP II, for £119.9 million, meaning investors will receive returns from admission.

In addition, the asset manager and has identified a further £400 million of investments.

The Marble portfolio comprises of 90 properties valued at £108.9 million, while REIP II is made up of three assets valued at approximately £11 million. Together they produce an annual rent of £10.8 million, a net initial yield of 8.64 percent.

M7 Real Estate has been asset manager to Marble and REIP II since January 2015 and October 2014, respectively.

According to M7, the portfolio will target a 6.5 percent dividend yield and 10 percent in total shareholders returns, benefitting from stable income streams from a diverse portfolio.

The investment manager is looking to take advantage of the rise of small and medium sized enterprises, which have played a “critical part” in facilitating the growth of multi-let regional real estate assets, according to Stephen Smith, chairman of M7 Multi-Let REIT.

Smith added: “At the same time, the sector is often overlooked by investors, being considered by some as inefficient due to the small individual lot sizes and/or because of the requirement for active and intensive management.”

“This provides what we believe is a compelling opportunity to acquire real estate at attractive yields, with value-add potential and often at below replacement cost.”

Richard Croft, CEO of M7 Real Estate, commented: “We have also identified a £400 million pipeline of further investment opportunities which puts us on course to fully deploy the remaining proceeds within nine months following admission.”

“Our co-investment and innovative rental income based fee structure underline both our alignment with other shareholders and the confidence we have in the returns we can deliver.”

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