TWO major asset managers have launched a commercial property company expected to have a market worth of about £274 million when it floats on the stock exchange this week.

Glasgow-based London & Scottish Investments (LSI) and Toscafund, the investment manager chaired by Sir George Mathewson, former boss of Royal Bank of Scotland, have linked up to launch Regional REIT.

It will float at 100p per share on the London Exchange on Friday, with the offer of 80m shares having been fully subscribed. Blue-chip institutions have backed the offer, which comes as LSI and Toscafund note that capital is moving back into the regions amid economic recovery.

Toscafund and LSI will have a combined 23.5% stake in Regional REIT, which will float with a 128-strong portfolio worth £386m. Fifty-one of its properties are in Scotland, including Tay House in Glasgow.

Regional REIT has a further £250m of potential acquisitions under review. It said its focus will be on acquiring and managing “high quality secondary commercial real estate” outside London. LSI, which alongside Toscafund has invested in around £500m of assets, will handle property management for the new venture.

Chief investment officer Stephen Inglis LSI, said: “This is great news for LSI, being appointed to run the property assets of Regional REIT.

“We have worked very hard to build up the portfolio from zero in June 2013 to 128 assets located throughout the main regions of the UK. These cities and regions are showing strong signs of economic growth, resulting in increasing demand for high quality office and industrial space and, at the moment, supply does not meet that demand.”

LSI and Toscafund cite the ability to access to capital, both equity and debt, as a key reason behind the decision to float Regional REIT. They note that shareholders will be able to retain ownership of the assets beyond the stated life of the funds in order to achieve greater total returns.

Other factors behind the listing include the permanent capital base that it will provide, as well as liquidity for existing and future shareholders. The listing will also allow a “material reduction” in current funds management and incentive fees, which will benefit shareholders, the firms said.

Toscafund has more than $4 billion of funds under management, with clients including pension funds, international institution funds, and private family offices.

In August LSI acquired 14 sites from Tesco that were previously earmarked for store development, and aims to put the sites to a variety of retail and residential uses.