Investments  

Property trust floats on London Stock Exchange

Property trust floats on London Stock Exchange

The AEW UK Long Lease Real Estate Investment Trust has floated on the London Stock Exchange after raising £80.5m from investors.

The launch of the real estate investment trust comes as figures from Nationwide reveal a third consecutive month of slowing house prices across the UK.

The trust has listed just a few weeks before Brexit negotiations are set to begin, which many experts fear could cast further uncertainty on the property sector.

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Some fear the beginning of talks on the UK’s departure from the EU could spark a situation reminiscent of the fallout from the EU Referendum which saw the share prices of some real estate investment companies plunge by as much as 40 per cent and many open-ended funds forced to suspend trading.

AEW UK’s new launch will aim to invest in property across a range of sectors including hotels, student accommodation, assisted living, leisure and education. It will have a focus on leases which are at least 18 years and whose ground rent is linked to inflation.

AEW said it would focus on protecting investors’ money as well as delivering returns and it will target an initial annual dividend of 5.5p a share, which will be paid quarterly once it is fully invested.

Steve Smith, chairman of the company, said: “We believe our strategy is a strong one and we are well placed to capitalise on our strong pipeline of investment opportunities. We look forward to delivering the secure, diversified and sustainable income return that our investors are seeking.”

AEW UK already has a Short Lease Real Estate trust, which launched in May 2015; its share price has climbed from 100p at launch to 104.9p on Friday (2 June).

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “Income seekers will naturally be attracted to anything which claims to offer a 5.5 per cent yield, but the proof of the pudding will be in the eating.

“While the commercial property sector has recovered some of its poise since the post-Brexit panic, there are still some challenge and much will depend on how the UK economy performs as well as the investment manager’s skill in navigating the market.”