Mill Group Residential has launched what it claims is the first “mainstream residential” real estate investment trust, which it has made available directly via a crowdsourcing platform.
The minimum investment via the platform SyndicateRoom is just £1,000 and the proposed intial public offering is the “first” to simultaneously offer shares to institutional and crowdfunding investors. Both are being offered the same class of shares.
The company is managed by Mill Group, and holds a portfolio of residential properties and, as a Reit, no tax would be paid on its core rental income or capital gains. Mill intends to list the Reit on a UK stock exchange, after which the shares will be tradable.
The Reit is launching with seed capital invested or committed from its managers of circa £2m and is making an initial £300,000 of equity available via crowdfunding firm SyndicateRoom.
To qualify as a Reit, the company will distribute at least 90 per cent of its profits from its rental business to its shareholders in the form of dividends, which have tax advantages for investors who hold their Reit shares in an Isa or Sipp.
Mill Residential said that previous UK Reits have mainly focused on commercial property but its fund is the first to invest exclusively in the mainstream residential sector. It said it is designed for investors keen to gain exposure to buy-to-let without taking on the full cost of a property.
Its initial portfolio is almost fully let and generating income, and consists of properties located in the Reit’s initial target locations of London, southern England and the Midlands and ranging in value from £180,000 to £430,000, Mill Residential said.
David Toplas, chief executive of Mill Group Residential, said: “With house prices disappearing out of reach for would-be buyers in several parts of the country and mortgage rates expected to rise in 2015, rental demand – and landlords’ incomes – are going from strength to strength.
“Mill Residential Reit will add further value to its portfolio through development and refurbishment, and offer its shareholders a tax efficient, affordable and, when listed, more liquid alternative to owning a self-managed, buy-to-let property.
“Mill Group Residential has always seen itself as an innovator in the property and finance space, and we view SyndicateRoom as a natural partner to help us raise funds from sophisticated crowdfunding investors in tandem with our IPO.”
Gonçalo de Vasconcelos, founder and chief executive officer at SyndicateRoom, adds: “The Mill Residential Reit offers both large and small investors a more liquid way to hold a diverse range of buy-to-let properties in their portfolio, but at a fraction of the cost of owning a property outright.
“That this is the first time a traditional IPO has been combined with crowdfunding is both a testament to Mill Group’s progressive approach and a demonstration of just how sophisticated crowdfunding has become.”
ruth.gillbe@ft.com
