IPSX, the company looking to set up a stock exchange for individual commercial real estate assets, has received regulatory approval from the Financial Conduct Authority and could launch the exchange as soon as the second quarter of this year.

When the exchange launches, investors will be able to buy shares in companies, typically special purpose vehicles, that own individual buildings. Those shares can then be traded like shares in a company listed on the Financial Times Stock Exchange or Nasdaq stock exchange.

Valuations will be a function of the perceived return available as a dividend, together with the embedded value of the asset and the quality or strategy of the company’s asset manager, IPSX said in a statement.

“From now on, every type of investor can access the returns from institutional investment grade real estate by buying and selling shares in issuers through IPSX,” IPSX Chairman and founder Anthony Gahan said. “Imagine the ‘person on the street’ buying shares in a company owning the building he works in — or even the Premiership football stadium where he watches his favourite team play. Add to that a real estate yield, tangible asset backing together with the protections of IPSX’s regulated market and you have a compelling proposition.” 

For the institutional real estate asset owner, IPSX said it provides an alternative public market option to a traditional private sale with the flexibility to retain an interest in the asset through keeping shares in the asset-owning company.  

For owner occupiers, this means value can be released from strategic freehold assets without entering into a traditional sale-and-leaseback transaction or procuring a joint venture partner, the company said. Corporate real estate assets can therefore be a source of capital to reduce debt or invest in the owner’s core business. 

IPSX said that at a time when some real estate assets are so valuable that few institutions are able to buy alone and private sale processes result in only one bidder submitting an offer to buy the asset, the exchange would provide a new source of liquidity.