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IPO activity: Winners and losers

Heraclis Economides, managing director, corporate finance, Bridgewell Group.

More international listing alternatives
Bell bottoms

Of the 71 properties companies listed in Europe in the year to April 2007, 39 of these listed in London, raising £3.8 billion. London is likely to continue to dominate equity issuance in real estate, benefiting from the growing realization that the public markets can offer a better pricing mechanism for property than the private market.

The wave of IPOs of externally managed property funds has abated, while IPOs of self-managed property companies are on the rise. Since July 2006 the split between these is 50/50.

The geographic spread is becoming more diverse as investors are prepared to accept a higher risk/reward trade-off. Investors are also more discerning, for example, they are less willing to back IPOs that are no more than a recapitalization of a highly leveraged balance sheet or participate in blind pools.

Only 8% of equity raised for IPOs in London in the past year was for UK properties. This should get higher given that only 5% of the UK real estate market is held in listed vehicles compared with 10% in the US and 30% in Australia.

The winners among recent IPOs have quickly emerged and many have tapped the markets for more equity – for IPOs since the start of 2005, follow-on offerings in London have now reached £1.5

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