Fife Capital's REIT jumps on debut

Australian Industrial REIT (ANI) opened 4.5% higher in its debut on the Australian Securities Exchange.

Australian Industrial REIT (ANI) has opened 5% higher in its debut on the Australian Securities Exchange.

The Industrial Real Estate Investment Trust (REIT), launched by boutique fund manager Fife Capital, began trading at $2.10 at midday, 10 cents above its $2 initial offer price.

This puts Australian Industrial REIT's market capitalisation at around $135 million.

Exposure to Australian Industrial REIT’s eight industrial properties, worth a total $180 million, was in high demand from the start, with its initial public offer (IPO) heavily oversubscribed last month.

The REIT offers investors an 8.25% yield with only a 3.5% premium to net tangible assets.

Industrial property is particularly attractive because of its robust outlook compared to the other subsectors within REITs. In particular, online retail is driving demand for larger, prime-grade warehouse space (see David Gilmour's Online retail spurs space mission).

Further, Australian Industrial REIT’s properties have a six-year weighted lease expiry, lessening the investment’s earnings risk.

The original shareholders are selling 100% of their portfolio in the company, which means all 64,500,000 units are trading on the ASX.

Australian Industrial REIT’s strong float is yet another sign of investors’ appetite for initial public offerings across a range of sectors. Last week boat tours group SeaLink (SLK) docked at a 38% premium on its first day of its listing compared to its offer price, and the week before that, online foreign exchange services provider OzForex (OFX) closed 28% higher.

Other companies with good starts to their lives on the ASX this year include 99 Wuxian (NNW), Virtus Health (VRT) and Steadfast (SDF).

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