As the success of fast-fashion and other online retailers shows no signs of abating, the recently formed investment vehicle, Warehouse REIT is looking to IPO on 20th September 2017 and take advantage in the rise in demand of warehouse space.
Whilst traditionally, warehouses have been found out of town or in specific industrial sites, the rise of online retailing has led to the increase in numbers of the so-called ‘urban warehouse’, those situated in towns and cities. These warehouses often hold enough stock so orders made online can be delivered in a matter of hours.
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Warehouse REIT hopes to raise £150m through a float on London’s Alternative Investment Market. According to details released, if admission is successful, £108.8m of the total funds raised will be invested into 27 warehouses located in urban areas across the UK. The warehouses currently host stock for companies such as Amazon, Boots and Argos.
The company has already confirmed its intention to float, through which it affirms that the demand for warehouse space from online retailers has increased significantly and will continue to do so over the next few years.
In 2007, demand for warehouse accommodation from online retailers accounted for just 1% of the UK take-up but this figure grew to 29% by 2016. The change in the market dynamic is clear, with online sales projected to grow to nearly double by 2021.
The company is targeting a total annual return of 10 per cent through a combination of dividends and net asset value growth. Dividends will likely be paid on a quarterly basis.