The International Property Securities Exchange (IPSX), the world's first regulated stock exchange dedicated to IPOs and trading of commercial real estate, is being wound up after only four years and three IPOs.
What is the IPSX?
The International Property Securities Exchange (IPSX) launched in 2019 and enabled the effective listing of a single commercial property, with the idea that owners could realise some of their investment but without a refinancing or a sale and leaseback. Instead, they could IPO their propco and sell down at least 25% of their stake. The commercial property, which needed to occupy a single geographic location or postal address, had to be of institutional grade (minimum £50 million market value) and have a maximum 40% loan-to-value (LTV). Shareholders could then invest in a building as opposed to a company, and it would democratise property investment and enable investors to focus their funds on a particular city. Over time the listing of portfolios with a commonality between the assets was also permitted.
How has the ISPX performed?
In the end, there were only three listings – all of which were linked to one of the founding IPSX shareholders, M7 Real Estate. These were also wholesale listings, i.e. not open to retail investors. The first was the Mailbox REIT in May 2021 in respect of the 698,000 sq ft Mailbox building in Birmingham, then the M7 Regional E-Warehouse REIT in December 2021, and finally the BWP REIT in respect of Bridgewater Place in Leeds in November 2022. There were rumours about listing a football stadium and other buildings, including the Capital Building in Liverpool owned by Starwood, but these didn't come to pass.
Why is the IPSX closing down?
Perhaps IPSX was unlucky with its timing: Brexit was unfolding and Covid lay ahead. Nonetheless, with only three companies and little liquidity there wasn't much to attract investors, and without investors there wasn’t a significant market. Perhaps the idea was ahead of its time or, as once said, 'a solution without a problem'. Either way, it was a rare innovation in the stock exchange world.