Start-up retail REIT Metric nets £175m from flotation

New retail property company Metric Property Investments floated this month on the London Stock Exchange main market, beating its £150m target to raise £175m of equity. The company, launched by retail experts Andrew Jones, Mark Stirling and Valentine Beresford, has three cornerstone investors, including pension fund USS, which took close to 10% each.

As well as UK investors, the share register includes Dutch, US and Australian names. The directors have invested £6.5m. Metric is structured as a REIT – the 22nd to be launched in the UK and the third start-up. The trio’s retail expertise was built up at Pillar Property, taken over in 2005 by British Land, where Jones was head of retail. Jones said: “A listing was the obvious route.

This was never an opportunity fund – it is an evergreen company, so going onto the main market was not a problem and being a REIT doesn’t constrain us; it just means we pay less tax.

“There are not many small retail companies on the main market anymore. Pillar, Edge, Grantchester, Tops Estates and Asda Properties have disappeared and we will grow into the gap, just as companies such as industrial specialist Hansteen or central London’s Great Portland Estates have in their sectors.

“We have jumped off a cruise liner and into a speed boat,” Jones added. Oriel Securities and JP Morgan Cazenove were joint sponsors and book-runners for the flotation.

Jones said Metric plans to buy out-of-town retail and some shopping centres. It will also opportunistically buy high-street or edge-of-high-street stores with potential to improve rent or security of income, and then trade them.

Metric expects opportunities to arise where borrowers need to refinance and are under pressure from banks. According to Jones “most of the falls in retail rents have taken place”, but much property is over-rented with reversionary yields above initial yields, “which can’t be right”. Metric has three “favoured partners” and a potential £80m shopping centre deal lined up.

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