Friday 30 September 2016

Hedge fund golden boy John Paulson pulls €23m worth of shares from Green REIT

Published 01/11/2015 | 02:30

The hedge fund founded by star trader John Paulson sold the shares in two transactions on October 26 when Green’s share price closed at €1.52, meaning it earned around €23m from the sale
The hedge fund founded by star trader John Paulson sold the shares in two transactions on October 26 when Green’s share price closed at €1.52, meaning it earned around €23m from the sale

New York hedge fund Paulson & Co has sold around 15m shares in Green REIT, bringing its stake in the Dublin commercial property investment firm to below 9pc.

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The hedge fund founded by star trader John Paulson sold the shares in two transactions on October 26 when Green's share price closed at €1.52, meaning it earned around €23m from the sale. The transactions cut the company's stake in Green from 11.2pc to 8.7pc.

Paulson was previously Green's single biggest shareholder - but that title now falls to Franklin Templeton.

Green was the country's first real estate investment trust (REIT). The company is mostly owned by institutional investors from overseas. Five US institutions own around 40pc of Green on their own. It listed on the Irish Stock Exchange in the summer of 2013, raising more than €300m to invest in commercial property.

Green REIT posted profits of €156.3m in the 12 months to the end of June 2015, up from €43.1m a year earlier.

In September its chief executive Pat Gunne warned of a potential oversupply in the Irish commercial property market.

Gunne said that if all planned supply comes to the market in 2017 or 2018, it could drive down rents very quickly, and potentially leave property investors nursing heavy losses.

There was still significant demand in the Dublin office market but that would likely change as more supply becomes available, he said, with as much as 5m square feet of space to be developed.

That would be more than 20pc of the current market.

Months before that the chief executive said US investors were concerned about Ireland's political and financial stability and the potential knock on effect on the property market here.

The firm's American shareholders were asking about the country's stability "all the time" amid worries that the property market may struggle to maintain its current levels, he said last December.

Paulson & Co founder John Paulson is famed for reaping $15bn from the US housing crisis in 2007 by wagering against subprime mortgages.

He was one of the few winners to emerge from the financial crisis.

He founded his hedge fund in 1994 and spent more than a decade as a middling performer in an increasingly crowded pond, until realising that the US mortgage market was headed for disaster as millions of homebuyers were signing up to loans they would not be able to afford.

The multi-billion dollar market for mortgage derivatives was bound to collapse, he calculated.

The ensuing profits put him among the top earners of 2007, ahead of George Soros.

Paulson has struggled to regain its footing since 2011, when bets on the US rebound went awry. Assets at the firm have dwindled to less than half of the $38bn at their peak in 2011.

Last year was Paulson & Co's second-worst year.

Sunday Indo Business

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