Families with property companies are looking for different ways to pass on their portfolios, according to Richard Shepherd-Cross, fund manager at Custodian Real Estate Investment Trust.
In the past 12 months the Reit has bought three family property firms through its shares.
Shepherd-Cross, the Reit’s managing director, said in similar structures there was often senior members of the family running the firm but the next generation may not be as interested in doing so.
“We have a solution [for them] – to buy the properties in an all share transaction,” he said.
“They are now passing on a managed solution rather than a problem.”
The shares can be passed on to the next generation with built up gains “extinguished”, said Shepherd-Cross.
“The entire deal happens gross of tax. It is a really neat solution and we get to secure properties at what we feel are good prices,” he added.
Shepherd-Cross said he expects more family property companies will want to take this route and said Custodian is in active discussions about more acquisitions of this nature “pretty much all the time”.
It is also a way for Custodian to get hold of more properties without issuing more shares to raise capital.
The Reit is currently trading at a discount of about 14 per cent.
Shepherd-Cross added: “Now is a great time to invest, but as a Reit trading at a discount we can’t issue new shares.
“In a perfect world I would raise money and go and buy real estate.
“Because we can’t go and raise that money I do not want to sit on my hands and say ‘it’s not fair’, we’ve got to look at other ways to grow.”
Shepherd-Cross is positive about the property landscape, adding: “It feels like the property market has had a weight on its back for two or three years now.
“At the start of 2025 we could feel that weight starting to slip off.”
He claims despite geopolitical shocks property “keeps chugging away”.
tara.o’connor@ft.com
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