Two others join race to become first investment trust IPO of 2022

Two investment trusts, which will have an income focus, have announced their intentions to IPO. 

Hot on the heels of Welkin China Private Equity Limited last week announcing its intention to IPO, two other investment trusts have joined the race to become the first closed-ended fund listing of 2022.

The Sustainable Farmland Trust is seeking to raise £200 million to invest in farmland and related agriculture-focused assets, while Independent Living REIT is targeting £150 million to invest in supported housing assets.

Both will have an income focus. The Sustainable Farmland Trust is targeting a dividend yield of at least 4.5%, while Independent Living REIT is aiming for income of 5p per ordinary share for its first two years followed by a progressive dividend policy.

The Sustainable Farmland Trust will mainly invest in the US. It notes three attractions are that farmland is historically negatively correlated to equity markets, provides stable income, and is expected to outperform in an inflationary environment. 

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Andy Crossley, chair of The Sustainable Farmland Trust commented: “We believe that the company is perfectly positioned for the current inflationary environment, with outstanding risk adjusted economic returns while also providing a sustainable and appropriately managed food source.

“We believe this unique and highly scalable asset class has enormous potential to provide long-term returns from a combination of both income and capital growth that historically outperform further in an inflationary environment."

Independent Living REIT also cited inflation. It pointed out that supported housing assets offer government-backed and inflation-linked income.

Atrato Partners will be the investment adviser. It is also the investment adviser to Supermarket Income REIT (LSE:SUPR), a real estate investment trust that is dedicated to investing in supermarket property. The firm also manages Atrato Onsite Energy (LSE:ROOF), which last November became the first UK-listed investment trust focused on rooftop solar power installations.

The trust said it will focus on three areas that are let to compliant tenants; specialised supported housing (accommodation designed for adults with learning difficulties, mental health issues or physical disabilities), extra care (larger blocks of flats, primarily for adults aged 55 and over), and homeless accommodation (accommodation for people who have an immediate and unexpected housing need, including victims of domestic abuse and asylum seekers).

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Fiona Miller Smith, chair of Independent Living REIT, commented: "The number of vulnerable people relying on supported housing is set to significantly increase over the coming years, whilst the structural undersupply of appropriate accommodation remains. We aim to address this rising demand and limited supply by leasing affordable, dedicated housing to housing associations via a well-governed and compliant model.”

New stock market listings have been in short supply so far in 2022 due to the volatile market backdrop. In contrast, 2021 was a bumper period with 16 investment trust IPOs.