Aviva Investors, the alternative investment branch of Aviva insurance, is aiming to raise as much as £200m for its secure income real estate investment trust (REIT) via an initial public offering, which will include an investment of up to 25% from its parent company.
The REIT will be managed by Aviva Investors Global Services, and will invest in property assets with a typical minimum lease of at least ten years. The company says it has already identified a pipeline of investments which comprises an initial £85m portfolio of four investments and a further £400m to follow on at a later date. Initial investments include a GP surgery, an office, a hotel and a supermarket and have varying credit grades.
The REIT will be managed by Renos Booth and Luke Layfield. Booth said of the opportunity:
The current environment of low interest rates and rising inflation is particularly favourable for long income real estate investments. Our strategy aims to provide a compelling risk return profile that offers secure income as well as lower volatility and lower capital value risk compared to traditional real estate investments, which we have a strong track record of delivering through investing in secure and long income real estate.
Aviva’s REIT will target a total return of seven per cent per annum, including a dividend yield of five per cent per year in the medium term. In its first year, the target dividend yield will be three per cent, with dividends to be paid quarterly. The company expects the £200m raised to have been invested within nine months.
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Aviva is likely to publish a prospectus some time in mid to late-November.