No vote clears way for Ediston REIT

Former Schroders boss William Hill and Ediston Real Estate founder Danny O’Neill have teamed up to launch the UK’s newest REIT. The duo are part of a heavyweight group behind Ediston Property Investment Company, which this week raised £95m in an initial public offering and is expected to grow to about £400m over time. Hill is one of the key directors on the REIT’s board, while ex-Standard Life fund manager O’Neill will act as the closed-ended vehicle’s property adviser through Ediston Properties. The REIT’s adviser, Canaccord Genuity, first approached the market in July, but the inclusion of a Scottish asset in the seed portfolio (see below) and a Scottish adviser, in the uncertainty surrounding the referendum, meant the capital raise did not close until this week. Despite the delay, the core-plus listed company has attracted a range of investors, comprising institutional funds – including an Axa subsidiary – wealth managers and pension funds, enabling it to exceed its £85m minimum target. The first round of equity will be used to complete the purchase of a £77m portfolio from Europa Capital, but gearing and further fundraises will see the vehicle grow “in a responsible and sustainable way”, said Hill. Ediston Property Investment Company will invest mainly in income-producing office, industrial and retail assets, including retail parks. Alongside Hill, the REIT’s board brings together EY global wealth and asset management head Ratan Engineer, former Cala Group finance director Robert Dick and corporate financier Robin Archibald. Hill said that when the idea was first raised by Canaccord in the summer, the directors “believed that the market would be very receptive to an income-driven product backed up by strong entrepreneurial property management”, such as Ediston. Canaccord’s head of investment companies, Robbie Robertson, said that completing a £95m fundraise “in what have been very challenging market conditions over the last few weeks” confirms that “the desire for income remains very strong”. The vehicle, which listed on the London Stock Exchange’s main market at 100p, is targeting a minimum 5.5% annual dividend. Debut deal The five-strong seed portfolio includes: St Philips Point in Birmingham, Phoenix House in Reading, 145 Morrison Street in Edinburgh, Cutler’s Gate in Sheffield and Clwyd retail park in Rhyl, Wales. The portfolio provide a rent roll of £5.7m, reflecting a sub-7% yield on the £77m purchase price. Allsop advised on the sale.   chris.berkin@estatesgazette.com bridget.o’connell@estatesgazette.com