The listed property sector lost more than a few names last year, and new issues didn't take up the slack. Hopes that Special Opportunities Reit would become the first real estate investment trust (Reit) IPO since Life Science Reit (LABS) ended in the summer after it failed to reach the £250mn minimum fundraising required for the listing to proceed. There were hopes of a second attempt, with Green Street News reporting rumours of a £200mn Knight Frank Investment Management vehicle in the offing. However, a lot will need to change for optimal conditions to return.
There was only a brief window of opportunity for a run at the equity market, said Marcus Phayre-Mudge, fund manager at TR Property Investment Trust. "The market rallied through August and September, and then in October and particularly November and December, [markets] have been volatile," he said.
Steep discounts to net asset value (NAV) in the Reit sector also make new raises challenging, even if there are some questions around the usefulness of NAV as the principal value metric. Property also needs to compete with fixed income to deliver returns so when investors can get better, less risky returns in the fixed income space, Reits become less attractive.