Opinion: Why investors should be cautious on property trust IPOs

Is level of issuance sustainable?

The number of initial public offerings (IPOs) for property investment companies skyrocketed in 2017 as investors continued to clamour for steady sources of decent income, writes Alex Moore, research analyst at Rathbones.

To meet this persistent demand, issuers have been working hard to differentiate themselves. But we are concerned that this demand, and the premiums it has created, may be unsustainable. After a turbulent 2016, many established commercial-property focused real estate investment trusts (REITs) are trading at premiums despite an uncertain outlook. High-street retail faces significant challenges and office demand across the UK is variable, while relentless demand for industrial space has pushed up prices. Fund managers are viewing this as an interesting time to launch new vehicles. Mos...