New Property Stock Exchange To Sell £120M Stake In Birmingham’s Mailbox
The IPSX property stock exchange has been in planning for more than four years and it is now getting ready to list its first property. Here is what you need to know.
What is it?
IPSX is a stock exchange that would give investors the chance to buy shares in individual buildings. It would be the first stock exchange for buildings anywhere in the world.
Who is behind the idea?
Former banker Anthony Gahan is the founder and chairman, while former GVA Chief Executive Rob Bould is a non-executive director and longtime champion of the idea. Property companies British Land, M7 and Moorfield are shareholders in the exchange.
What is the point?
The backers say the exchange will give investors, particularly private investors, the chance to buy a small slice in well-known properties that they could never otherwise afford, bringing a new source of buyer and more liquidity to the sector. There would be no bar to these investors selling their shares in the property, as there can be with open-ended funds for private investors.
As with any exchange, shares in the properties listed could be volatile, even if the performance of the underlying asset isn’t. At times when the property market is heading south, shares in assets could trade at big discounts to their value, making them less liquid.
So what can investors actually buy?
On Saturday The Times reported that the first property to be listed on the exchange will be The Mailbox in Birmingham, which was bought last year by one of IPSX’s backers, M7, for £190M.
“Genuinely game changing,” M7 Chairman Richard Croft said on Twitter. “IPSX can democratise the ownership of major commercial real estate with real liquidity and no gating. Excited to be involved and for M7 to be at the forefront of an evolving market.”
What should I know about the Mailbox?
The building is one of the best-known in Birmingham, and is an interestingly unconventional first choice for IPSX. It is 700K SF, with a mix of uses including retail, leisure and offices. It houses Birmingham’s Harvey Nicols department store and has space leased to the BBC.
What is being listed on IPSX?
According to The Times, investors will be able to buy about £120M of shares in the Mailbox, or about 60% of the equity in the building. Existing owners will not sell 100% of buildings on the exchange, but portions, and retain management control.
What is the appeal for sellers?
This first listing would indicate that owners think there might be a potential arbitrage in listing shares in buildings on the exchange. M7 bought the Mailbox for £190M last year, but The Times said an independent valuation for the listing is expected to come in at £200M. That is a £10M uplift in a very short time.