West End of London Property Investment Company ('WELPIC' or the 'Company'), a newly formed, Guernsey incorporated closed-ended investment company, today announces its intention to proceed with an issue of Ordinary Shares to raise in excess of £100 million and seek admission of its Shares to trading on the AIM market operated by the London Stock Exchange.
The Company's objective is to gain exposure to office property in the West End and Mid-Town areas of London, two of the most sought after markets in the UK property market, by investing in West End of London Property Unit Trust ('WELPUT'), a Jersey closed-ended unit trust with a proven track record, which was established in 2001. WELPUT owns an £873 million (approx. €1.07 billion) portfolio of diversified real estate assets located in London's West End and Mid-Town office markets, through which it targets capital appreciation and income return.
Following Admission, the Company will not have any substantial assets or business other than Units in WELPUT. It is the Company's intention to increase its market capitalization to in excess of £250 million over the next 18 to 24 months and, if the Company achieves its growth plans, to seek admission to the Main Market of the London Stock Exchange.
Key highlights
WELPIC will provide investors with exposure to office property in the West End of London and Mid-Town office markets by investing in WELPUT, a market-leading institutional investment fund which has built a strong equity base including some of the UK's largest pension funds.
Schroders and the senior team of Grafton Advisors have been working together managing and advising WELPUT since its launch in 2001. The combination is unique, offering the investment management capability of Schroders, a leading global asset manager, with the investment and development expertise of Grafton Advisors, a West End property specialist , and has delivered a strong track record demonstrated by WELPUT delivering a total return of over 26 per cent. per annum over the three years to September 30, 2012. Grafton Advisors is wholly owned by Quintain Estates and Development PLC and, together with Schroders, its team launched WELPUT while at Benchmark Group PLC. The WELPUT management team is highly experienced and well-resourced and the key members of the team have been involved since WELPUT's inception.
The Net Proceeds of the Issue, less a retention for working capital purposes, will be fully invested into WELPUT shortly following Admission and Shareholders will therefore gain immediate access to an £873 million portfolio comprising 12 West End of London and Mid-Town properties ('the Portfolio').
The Portfolio provides the potential to add value through significant refurbishment and re-letting opportunities timed for anticipated growth in rental values in the West End and Mid-Town office markets.
An investment in WELPIC enables investors to gain access to WELPUT via a listed entity at a purchase price which appears attractive based on WELPIC's ability to acquire units at WELPUT's NAV shortly following Admission, particularly when compared to listed property companies investing predominantly in London that are currently commanding premia to their respective NAVs.
The West End of London office market has delivered long term outperformance on a total return basis, being the top performing property segment over three, five and 10 years (to September 2012 as measured by IPD).
This relative outperformance is expected to continue to be driven by the highly diversified occupational base and restricted scope for new development due, in particular, to planning constraints. This is expected to lead to attractive rental growth prospects and, according to CBRE, rental values in the West End could grow by 4.4% per annum by the end of 2016 (against 2.2% per annum for the UK property market). Adding support to the favorable prospects for West End offices is their significant global appeal to investors.
WELPUT distributes all of its net income on
