Saturday 25 January 2020

Kennedy Wilson firm pays no tax on its €1bn Irish property assets

An artist’s impression of the revamped Stillorgan shopping centre
An artist’s impression of the revamped Stillorgan shopping centre
John Mulligan

John Mulligan

Property investment giant Kennedy Wilson Europe Real Estate (KWER) - which holds €1bn of assets in Ireland - pays no tax here because it owns its Irish investments via two qualifying investor alternative investment funds.

The company, which is listed in London, released half-year results yesterday, said that it only pays tax in the UK and Spain, but not in Italy and Ireland. The firm, which is an offshoot of US-based Kennedy Wilson, is tax resident in Jersey, and only operates in those four countries.

The company has a total of £3bn (€3.5bn) in assets across the four countries, with 42pc of those assets being held in Ireland, Italy and Spain, and the remainder in the UK. It paid a total of £2.9m in tax during the first half of the year, which was down on the £3.2m it paid in the first six months of 2015.

KWER pays 25pc tax on taxable profits generated in its Spanish subsidiaries, and it pays income tax at 20pc on rental income derived from its UK investment properties.

But the qualifying investor alternative investment funds (QIAIFs) it uses in Ireland to hold its assets here are exempt from any Irish taxation on income and gains.

"Both of these QIAIFs have been converted to and operate as Irish Collective Asset-Management Vehicle," said a spokesman. "Both these vehicles are exempt from any Irish taxation on income and gains."

KWER owns the newly redeveloped Baggot Plaza in Dublin, which has been fully let to Bank of Ireland on a 25-year lease. KWER redeveloped three former office blocks on the site.

The property group also owns The Chase in south Dublin, a 175,000 sq ft office which it bought for €62.5m this year. Also in south Dublin, it owns the Stillorgan shopping centre, as well as the former Leisureplex site beside it. It's spending €15m to revamp the shopping centre, and has initialised a "concept design" for the Leisureplex site.

In north Dublin, it owns the Portmarnock Hotel & Golf Links. Investors in the hotel at one time included Tony O'Reilly. Prior to being acquired by KWER from Nama in 2014, it was owned by Capel Developments. KWER is nearly finished a makeover of the hotel.

KWER said Dublin could benefit from Brexit, as it's "well-placed to benefit from potential job relocations and the additional foreign direct investment opportunities that may arise, as companies look to realign their geographic footprint".

It added: "This should increase demand for offices and PRS (private rental sector), in particular. Apartment supply in Dublin, remains tight with no significant change forecasted in the near term."

Its total revenue in Ireland during the first half fell to £69m from £73.9m. Its rental income here rose to £19m from £13.9m, while hotel revenue was unchanged at £2.8m.

In the first half of the year, KWER said its group net operating income was £78.7m, 35pc higher than the £58.4m it reported in the first half of 2015.

"We strategically remained neutral between acquisitions and disposals to keep our powder dry, with £609m of liquidity at the end of June," said chief executive Mary Ricks.

Irish Independent

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