Tuesday 24 April 2018

Investors will be happy to see that their cash is being put to work

Peter Flanagan

Peter Flanagan

AND they're away. It has taken them four months, but the first Real Estate Investment Trust (REIT) in Ireland is now truly up and running after Green REIT made its debut purchases since being set up this summer.

The company has paid the guts of €180m for a portfolio of 10 commercial buildings from Danske Bank – the much heralded Project Arc – as well as EBS headquarters and Independent News & Media's print works in Dublin.

The deals put to an end what had become something of a running joke among the business community. Before these deals, Green REIT's only asset was a cash pile of some €310m, yet the company's market capitalisation was close to €380m. On the face of it, that did not seem to make any sense.

It hasn't held back for its first transactions, and is now almost 60pc invested. More investments will follow, undoubtedly.

The deals are welcome for a number of reasons. For investors in Green REIT, they can finally see their money being put to work and, on the face of it, it looks like the firm has chosen its investments wisely.

At a net yield of more than 8.5pc, Davy Stockbrokers' Flor O'Donoghue certainly sees them as a good prospect.

"This yield looks attractive and the acquired properties also offer asset management potential," she said.

"Green REIT is now already over 55pc invested and is off to good start in assembling a promising portfolio of assets. With a proven management team, Green REIT offers investors quality exposure to what is a recovering Irish commercial property sector," she added.

Green's investments will also be closely watched internationally. REITs are one of the most popular ways for institutions and individuals to bet on property, without actually buying the bricks and mortar themselves.

Commonly used in the US and elsewhere, REITs were not possible in Ireland until Michael Noonan amended the law to allow them to operate here at last year's Budget. Green's share register is a who's who of major investors, including Franklin Templeton – the asset manager which has made a huge bet on Irish bonds.

There are already plans in place for at least one other REIT to list in Ireland before the end of this year. If Green is successful, then there will be even greater appetite for investors looking at Ireland.

Irish Independent

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