Rugby Estates Investment Trust has begun trading on the London Stock Exchange this morning.
The trust has attracted £50m of equity from institutional investors in an IPO conducted by Collins Stewart. It will assemble a portfolio of UK investment properties by taking over privately owned property investment companies.
These target companies are likely to carry latent Capital Gains Tax liabilities built up over a number of years and the trust directors hope to exploit the fact that a sale of these companies to a tax-transparent REIT would mitigate tax leakage.
The trust has appointed Rugby Asset Management (RAM) as property adviser following its admission to the Official List. RAM will assume responsibility for Rugby’s growing co-investment and asset management business.
It currently manages almost £500m of property assets on behalf of O Twelve Estates, ING Covent Garden Limited Partnership and London Industrial Partnership.
David Tye, executive chairman of Rugby Estates and director of RAM, added:
‘This is a significant opportunity for investors to gain exposure to a range of incentives through the provision of a tax favoured structure. We have identified a number of private property investment companies to acquire that have potential tax liabilities, which we look forward to assembling within a REIT structure in the next 12 months.’