DECONSTRUCTED: Dealing in singles

As institutional investment into real estate is nearing all-time highs across the globe, one group wants to let retail cash in on the act.

As revealed by broadcaster Sky News, a group of London’s foremost professionals is preparing to launch a securities exchange dedicated solely to trading stakes in companies that own single commercial property assets.

The group behind the venture is trading as International Property Securities Exchange and has Sly Bailey, the former chief executive of publisher Trinity Mirror; Ian Axe, the former boss of clearing house LCH Clearnet; and Sir Brian Ivory, who chairs the hedge fund Marathon Asset Management, sitting on the board.

The revolutionary initiative is to be named London Real Estate Exchange Limited and could be formally launched within months, pending approval from the Financial Conduct Authority, according to the Sky report.

The exchange, which is to be chaired by Anthony Gahan, a senior investment banker and founder of Wyvern Partners, a corporate finance advisory firm, would allow single commercial real estate asset-owners with a market value of more than £25 million to list.

The initiative would be favored by corporate property owners as it would allow owner-occupiers to release value locked-up in their properties while enabling them to retain equity control.

Analysts speaking to Sky also said that the venture had the potential to disrupt traditional models of commercial real estate investment. In fact, they went so far as to say the exchange could help to reposition real estate as a mainstream, rather than alternative, asset class for retail investors seeking to deploy capital.

It could also be a boon for banks and insurers that are facing new regulations to liquidate large parts of their real estate portfolios.

In Europe alone the forced banking retreat from real estate was one reasons that the third quarter was the busiest real estate transaction period in 2015, with €21 billion changing hands in commercial real estate loans and real estate owned property. The third quarter accounted for roughly half of the total €44.6 billion European transaction volume in 2015 to date.

With increasing competition in the form of retail investors, it may mean getting ownership of property will become even more challenging.