Have you ever wanted to own a share in your favourite building?
When the International Property Stock Exchange launches in May, that might well become possible.
IPSX is the brain child of David Delaney, 56, a former banker who was at Barclays for six years and Credit Suisse for 20 years as a fixed-income specialist.
He plans to list individual buildings in which investors can buy shares, starting with The Mailbox in Birmingham, an office building that includes the BBC among its 46 tenants.
The owners will raise £25 million from the float, valuing the building at £180 million.
You have to invest at least £1000, which you can do through most recognised stockbrokers, including The Share Centre, WH Ireland and Peel Hunt.
Until now, investors wanting to invest in commercial property would perhaps buy shares in British Land, or a Real Estate Investment Trust.
The IPSX allows you to build a portfolio of property investments, buildings you can see and even perhaps visit. The pipeline of deals – Delaney refuses to be specific yet – includes 38 properties, including some in the City and a couple of sports stadiums.
For investors worried about low interest rates eating away savings as inflation rises, property has always had an appeal. The Mailbox has a chunky yield of 7%, something that makes it sound somewhat risky.
Delaney, interviewed below, says it is for people with a “medium risk” profile and a balanced investment portfolio.
With typical divi payers such as the oil majors and banks in the doldrums – at least for income – IPSX might attract interest, he reckons.
Who is the typical client?
Anyone with an interest in Commercial Real Estate investment. The listed companies are minimum value of £50 million so it’s a very different exposure than your house/residential property. This is opening up the usually closed world of commercial real estate investment.
Is this part of London re-inventing itself post pandemic and post Brexit?
IPSX is the kind of exchange that will put the City back at the epicentre of world finance and get London’s beleaguered financial sector moving again.
So what’s the concept of a property stock exchange?
If we look at the outcome first, IPSX is all about giving investors direct access to a market just shy of a trillion pounds that provides an income in a portfolio. With bank rates where they are and investors getting scant return in their cash ISAs, this is about opening up the commercial real estate market to a new set of investors with high quality assets that derive a steady income.
So you are floating single properties?
In effect yes. Owners of an asset, be that a commercial building with rental income or perhaps even a brown-field site building a hospital or housing with a long-term stream of income, form a holding company and float that single asset on IPSX. Investors buy shares safe in the knowledge that they have full transparency and reporting of that single asset. IPSX is the newest regulated exchange in the UK and it is set to transform how assets are held and how private investors can invest in this asset class through their pension, ISA or dealing account and reap the benefits.
There have been issues with property funds recently…
Yes, the fund industry is under the FCA’s spotlight after the gating issues and the Woodford scandal. What we are doing with IPSX is lowering the inherent risk in the asset class and providing both transparency for the investor and crucially liquidity. We have Peel Hunt and Panmure Gordon as market makers and daily two-way prices available via The Share Centre, Jarvis Investment Management and WH Ireland.
And how has the industry reacted. Property is a bit of a boys’ club, no? Actually, it has been really positive. The industry can see that IPSX is a new source of liquidity and funding that they can access and we’ve had the likes of the British Property Federation come out and give their full support plus a whole host of industry luminaries from Mike Slade of Helical Bar and David Sleath of the FTSE100 listed Segro supporting us.
ESG investing is huge now – what are you doing with IPSX? Well globally, the real estate eco-system accounts for around 40% of the world’s CO2 emissions and it’s a problem. What we are doing with IPSX is working with Carbon Intelligence and giving investors ESG information on each property listed. With that full transparency they can drive change through the exchange. Listed assets will have to address environmental concerns or shareholders will vote with their feet.
How is the City of London thinking differently and taking action post Brexit? The City is regenerating. It always does. We’ve seen a small migration of talent in the capital markets but the City is great at coming up with new ways to access, create and distribute capital. IPSX is at the forefront of the new thinking. We are innovating and are determined to see the exchange as a vibrant source of liquidity for asset owners.
What about the now collapsed Football Index?
I don’t know anything about it!