M7 Real Estate backs Britain's smaller businesses with IPO of new property investment vehicle

Lucy White
Workers In Offices At Night In London
The REIT will invest in multi-let light industrial premises and multi-let offices (Source: Getty)

Real estate investment firm M7 has launched a new listed trust, focusing on commercial property in the UK, which aims to raise £300m in a stock market float.

In a sign of support for the UK's smaller businesses, it will take stakes in multi-let light industrial premises and multi-let offices which offer solid income from the small and medium-sized enterprise (SME) sector.

Read more: London commercial real estate attracts record first quarter investment, CBRE figures show, as overseas investors shrug off post-Brexit vote uncertainty

The trust is targeting a dividend of 6.5 per cent and 10 per cent total shareholder returns, and will offer income from the start as it is seeding the portfolio with £120m worth of assets which it already owns.

“The UK private sector is dominated by SMEs, which have consistently demonstrated more stable growth than large businesses, and UK multi-let regional real estate assets play a critical part in facilitating that growth,” said the investment trust's chairman Stephen Smith.

“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.”

Read more: Deutsche Bank's real estate fund has bought two buildings on London's Southbank in a £310m deal

Real estate investment trusts (REITs), such as M7's latest offering, have seen a boom in demand after their open-ended cousin funds suffered in the wake of the Brexit vote.

Following the referendum, so many investors wanted to withdraw their cash that the funds had to sell investments to meet the redemptions and some even had to cease trading.

But REITs are closed-ended, so investors can only sell shares to other interested investors. The M7 Multi-Let REIT will be the largest of its kind to float this year.

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