Barclays Plc (BARC) sold 200 million pounds ($300 million) of structured notes that are the first linked to benchmark indexes tracking U.K. commercial real estate.
The securities from Britain’s second-biggest bank reference two indexes developed by MSCI Inc. (MSCI:US) subsidiary Investment Property Databank Ltd. that track all property values in the U.K. except residential homes. The notes have maturities of two and three years, according to data compiled by Bloomberg
U.K. commercial property values fell for the 15th consecutive month in January, according to the latest data from IPD. Investor returns are set to improve through the year as central bank stimulus fuels confidence in the sector, said David Skinner, chief investment officer of real estate at London-based Aviva Plc (AV/), the U.K.’s second-biggest insurer by market value.
“We expect 2013 to be a turning point for U.K. real estate,” Skinner wrote in a report last month. Average annual returns for commercial real estate investments will be 8 percent from 2013 to 2017, Aviva forecast. That’s up from a previous estimate of 6 percent or less.
The IPD indexes were compiled from appraisals of 11,247 properties valued at 136.7 billion pounds. The total return index gained 3 percent last year, while the capital growth version lost 2 percent, according to data compiled by Bloomberg.
Structured notes package debt with derivatives to offer customized bets to investors while earning fees and raising money.
Jodie Gray, a London-based spokeswoman for Barclays, declined to comment.
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