November 7, 2017 / 11:43 AM / a month ago

Insurer Aviva plans its first listed UK property trust

LONDON, Nov 7 (Reuters) - Insurer Aviva’s fund arm announced plans on Tuesday for its first listed UK property trust, joining a number of other such listings since Britain’s vote to leave the European Union increased demand for more liquid property assets.

The Aviva Investors Secure Income REIT (Real Estate Investment Trust) intends to raise 200 million pounds ($263 million) through an initial public offering in London, Aviva Investors said in a statement.

Property industry experts say real estate yield-seeking investors have been switching to listed REITs from open-ended funds since the Brexit vote.

REITs are closed-ended vehicles which investors buy and sell in the secondary market.

Such trusts had raised 2.3 billion pounds in new issues and initial public offerings by mid-October, compared with 2.1 billion pounds in the whole of 2016.

In the immediate aftermath of the Brexit vote, open-ended funds were forced to sell property to satisfy higher levels of investor redemptions, raising shareholder concerns about investing in them.

Several, including Aviva‘s, froze for several weeks while they offloaded properties.

However, an Aviva spokesman said the planned REIT was not in competition with Aviva Investors’ existing open-ended fund.

“The REIT will allow us to broaden our investor base for long (term) income real estate,” he said, adding the average lease would be 15 years.

The REIT will invest in traditional sectors such as industrial, logistics, offices and supermarkets, as well as alternative sectors such as doctors’ surgeries, student accommodation, hotels and car showrooms, the spokesman added.

Aviva Investors says it is the largest manager of UK commercial real estate, with 24 billion pounds under management as of Sept 30.

Jefferies is acting as adviser and bookrunner on the offering.

$1 = 0.7606 pounds Reporting by Carolyn Cohn; Editing by Mark Potter

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