Special Opportunities London listing falls flat after REIT fails to meet fundraising target
Special Opportunities REIT has pulled its IPO after falling short of its minimum fundraising target, scuppering the first stock market listing of a UK real estate investment trust in three years.
The internally managed REIT announced on Wednesday that despite “strong” investor demand, it failed to meet the £250m minimum fundraising required for the public listing to proceed.
It added that management would now execute its strategy in the private markets instead.
“Having considered their options, the board did not believe it would be in the best interests of investors to reduce the minimum fundraise below £250m given the nature of the market opportunity and pipeline,” the REIT said.
Special Opportunities REIT, which was incorporated in January, said two weeks ago that it was targeting a fundraise of £500m. This figure would have made it by far the largest London IPO of the year.
Three cornerstone investors had made commitments totalling between £104m and £119m. The management team and non-executive directors had also pledged to invest £4m in the IPO to show their commitment.
The REIT said it would focus on high-quality but under-managed UK commercial property assets like student accommodation, retail parks and budget hotels.
It had targeted a minimum return of between 12 and 15 per cent every year, adding that it had the potential to deliver more than 20 per cent per year.
The appetite for investment trusts has fallen to the lowest level in over a decade, leading to a lack of new IPOs on the market.
The only trusts to float last year were the Onward Opportunities Trust and Ashoka Whiteoak Emerging Markets, which is currently attempting to merge with the much larger Asia Dragon trust.
A survey conducted by investment trust specialist Winterflood in February found that only five per cent of its clients were “very likely” to support investment trust IPOs and secondary placings this year.