Mailbox to raise £63m in IPO
Landmark Birmingham site the Mailbox is to be put into a single-asset company and floated on a property stock exchange.
Mailbox REIT is expected to raise £62.5m by listing on the International Property Securities Exchange (IPSX), a relatively-new regulated exchange that is dedicated to commercial property.
The IPSX plan had been reported in January but has been delayed by the impact of Covid-19.
The company said the float will enable investors to gain exposure to the 698,000 sq ft development, which it said was valued at £179m in August.
Stephen Barter, chairman of Mailbox REIT, said: “Mailbox REIT offers an attractive dividend underpinned by the long dated income streams derived primarily from globally recognised, high-profile and low risk tenants as well as the anticipated income and valuation enhancement resulting from planned asset management initiatives.
“Furthermore, there is a clear demand and supply imbalance for prime Birmingham offices which we believe will only become more acute as a result of continued decentralisation and improved connectivity from HS2.”
Although the Mailbox is best known as being home to upmarket stores such as Harvey Nichols, Emporio Armani and Paul Smith, retail only accounts for 11% of its current £9.3m annual rent.
Offices, including the BBC and WSP, generate nearly half of the rent, while leisure, 21%, and car parking, 19%, also deliver seven-figure sums. At full occupancy, the site’s estimated rental value is £12.8m.
There is also an asset management plan in place that aims to generate more than £1m in additional annual rental income through the conversion of higher-risk and lower rental value retail space into offices.
Planning consent was granted in May to covert 50,000 sq ft on the building’s Level 1 into offices. £5.2m from the fundraising will be used to pay for the refurbishment.
M7 Real Estate will act as asset manager and also retain indirect ownership of approximately 46% of the company.
Richard Croft, executive chairman of M7 Real Estate, added: “After almost a decade of record low interest rates and no sign of any change to that status quo, we have an environment where investor appetite for asset backed investments underpinned by high quality income is arguably stronger than ever before.
“We are therefore firm believers in IPSX’s potential to help alleviate that demand, while at the same time transforming and democratising real estate investment, by making prime landmark assets such as the Mailbox available to all types of investors, large and small, through liquid shares that are tradeable on a new regulated stock exchange.”
David Delaney, group chief executive of IPSX, added: “This is a watershed moment in the history of IPSX, which has the capacity to be a great success story in UK innovation. The Intention to Float of the Mailbox REIT by asset owners M7, is a huge vote of confidence in the Exchange and of our ability to reach new investors. Many years of hard work have been undertaken to get the exchange to this stage.
“To have launched our first IPO in this extraordinary year not only reflects the strength of real estate as an investment class but also the compelling proposition that IPSX represents as a platform allowing all investors to access and selectively own shares in companies owning single commercial property assets in a liquid and regulated way. ”
