The first Real Estate Investment Trust to ever raise capital crowdfunding has entered into overfunding mode less than two weeks into its campaign.
Mill Residential REIT has topped the initial goal of £2.1 million (about $3.28M) from over 50 investors with seven days left in the public offer. SyndicateRoom revealed the unique project earlier this month. The REIT is expected to list on a public exchange before the end of the year thus providing liquidity out of the gate for investors. If for some reason the public listing does not occur, all funding will be returned to investors.
Mill Residential REIT has a targeted dividend of 3% with 90% of rental profits distributed every 6 months. The investment vehicle is designed for individuals interested in exposure to buy-to-let property without shouldering the risks and effort associated with becoming a landlord. The UK property market is quite hot right now with “demand exceeding supply”. SyndicateRoom states, “:Initial Target Total Shareholder Return – 10% plus p.pa (dependent on premium to NAV [net asset value] being established in market)”.
SyndicateRoom is facilitating £300,000 of the funding plus the overfunding allowance. Investors may participate at a minimum level of £1000.
While the initial funding amount is small in contrast to other REITs, Mill expects to raise additional funds going forward as they manage the growth of the REIT. Mill notes that in the UK 89% of private individual landlords hold 71% of all privately rented housing. Mill sees their REIT as a “mainstream residential market consolidator”. The UK residential market is estimated at £4.6 trillion with the private rented sector representing £837 billion. Mill believes the fragmented environment is a unique opportunity for a professional entity to enter the market.
As investment crowdfunding continues to evolve we expect to see ongoing innovation and new approaches to engaging private and professional investors with unique and compelling opportunities. We have already seen a publicly traded company raise capital on crowdfunding platforms. This first REIT is may end up being just as one as others follow.
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