BECOMING A UK-REIT 30
PRESENT A STRONG FINANCIAL HISTORY AND CREDIBLE FINANCIAL FORECASTS Although the detailed requirements differ between markets, in general financial statements covering a three year trading history of the business will be required for an IPO of an existing business. In most cases, these financial statements will need to be prepared under International Financial Reporting Standards (IFRS), as this is acceptable for IPOs on all major world stock markets. Financial projections for a period of at least 18 months from the anticipated date of the Admission Document/Prospectus will form the basis of the directors’ statement on the adequacy of the UK-REITS working capital. Longer term projections will be sought by the Sponsor/Nominated Advisor and Broker for valuation purposes and investor presentations. These projections will therefore need to be suitably detailed and capable of being easily flexed for sensitivity analysis.
CONSTRUCT A ROBUST INVESTMENT CASE FOR FUTURE INVESTORS The UK-REIT will require a clear, focused strategy with a detailed investment plan. This will be documented for investors in the IPO Prospectus/Admission Document and will include asset/investment strategy, debt levels/limits, dividend targets, and detailed documentation of risks and risk management. UK-REITs often choose to list using one of the following approaches: X IPO of an existing listed investment business X IPO of a new investment vehicle, which will use funds raised on IPO to invest in real estate, conditional on the IPO taking place and a minimum level of funds raised X IPO of a new investment vehicle, with no committed investments on IPO. The vehicle then deploys funds raised on IPO into a defined investment strategy. With a view to market conditions and input from the Broker or Sponsor/Nominated Advisor, businesses should undertake an IPO process with a clear view on the minimum funds needed and the expected yields/returns expected to be generated for shareholders. Consideration should be given to ensuring the corporate structure and dividend policy will be compliant with the REIT regime.
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