Real estate bankers expect up to five new IPOs could hit the market before the year is out, including Index Linked Properties, which is preparing to list on Aim. It has already agreed a deal with supermarket Tesco to purchase a £400m portfolio of stores, offices and distribution depots let to the retailer on a 25-year lease with index-linked rental uplifts.
If these new vehicles get off the starting blocks, they will join a growing band of companies who have collectively raised nearly £1bn this year (including our main market buy tips - up 44 per cent - and - up 27 per cent - who have both pulled off opportunistic fundraises).
Our 2009 Tip of the Year is now up 31 per cent, with veteran property chiefs Patrick Vaughan and Raymond Mould snapping up anything from stakes in prime shopping centres to flats on the site of Arsenal's old stadium.
Fellow Aim company has raised £195m and intriguingly acquired a chunk of listed property company Warner Estates. It is currently up 19 per cent on our buy tip.
Nick Leslau and Mike Brown's , which we also rate as a buy, concluded its first £232m deal last month, acquiring a distressed portfolio of industrial property. Another buy tip, Robert Ware's , successfully swooped on then pulled off a £69m placing last month, attracting cash from big institutional names.
At the smaller end of the Aim market, retail specialist raised £25m last month, and established property company Hawtin is currently tapping investors for opportunity cash.
The advantage of the opportunity players is that they have started at the bottom, and have no legacy issues. The biggest risk lies in the execution - it is difficult to forecast what returns will be achievable, and investors are placing their faith in the deal-making abilities of big-name investment managers. The pure opportunity plays are not paying dividends, meaning investors will have to hang on for the ride if they want a decent return.
Needless to say, a tie-up with a cash rich partner is a major advantage. London & Stamford boasts its Cavendish joint venture with a sovereign wealth fund, and Helical Bar has a big US pension fund waiting in the wings.
As the banks deleverage, they will be looking to work with those with cash and proven asset management expertise. This will certainly be the case for distressed assets such as development sites, half built shopping centres or major refurbishment projects where more money is needed to unlock opportunities.
Helical Bar, which has made fortunes in previous cycles by being the first to start developing after a slump, is tipped to follow suit this time around.
"You can't get bank debt for these kinds of deals, so it will all have to be all equity," says KPMG's international head of real estate, Jonathan Thompson. The huge risks inherent in such deals means the banks will have to part with assets for a song, or offer to joint venture on very attractive terms.
Cash may be king, but a track record in asset management has to be the crown prince.
"There is every reason to expect that the banks will approach people with relevant skill sets to run property investments and manage assets on their books while the market recovers," adds Mr Thompson. "I fully expect one or two deals will be announced next year – that is, unless the government changes the Reit rules, and lets the banks package portfolios of assets into listed vehicles themselves."
