MIDAS STOCK TIPS: UK Residential REIT suspended for itemizing

MIDAS STOCK TIPS: UK Residential REIT suspended for listing

Buying property to rent was lucrative until the government introduced new taxes on second homes and removed the tax break on mortgage interest.

That hasn’t stopped investors from getting interested in residential real estate, which the UK Residential REIT (URES) is betting on when it goes public later this month.

This real estate investment trust focuses on medium-sized rental properties in cities outside of London.

Home ownership is typically an illiquid asset, so a trust where you buy and sell shares is an attractive option

Kee Gan, Chief Investment Officer of L1 Capital, the company behind URES, is targeting city center apartments that generate instant income by leveraging economies of scale to refurbish them and raise rent increases.

Trust won’t start from scratch. If it goes public, it will acquire a seed portfolio of more than 1,200 properties and a pipeline of £ 440 million in investment opportunities from L1 Capital.

This seed portfolio performed well during Covid, with 96 percent rent move-in last year and 95 percent average occupancy over the past two years.

The trust’s goals are ambitious. Gan believes it can support a 5.5 percent dividend yield and a 10 percent annual return – the stuff UK savers’ dreams are made of.

Home ownership is typically an illiquid asset, so a trust where you buy and sell shares is an attractive option. They are also a way of keeping property within a pension or isa.

But there are reasons to be careful. Ryan Hughes of the AJ Bell investment platform points out that many homeowners are already heavily invested in the UK property market. An investment in rental apartments could therefore overexpose a lot.

Midas judgment: This end of the home rental market is not easy to achieve as an individual investor, but it can be lucrative. L1 Capital has a decent track record.

The first two real estate funds achieved double-digit annual returns last year. Those interested in acquiring stocks as the company lists can do so through brokers like AJ Bell, Hargreaves Lansdown, and Interactive Investor.

Are listed on: Main market Ticker: URES Contact: ukresidentialreit.com or 020 3871 2947

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