Owners of shopping centre to launch €200m property fund
Investment trust sees signs of recovery in Irish real estate
Management behind the company that owns Dublin's Blanchardstown shopping centre – Green Property – is ploughing €10m into Ireland's first real estate investment trust (REIT) as the company tries to raise at least €200m from international and domestic investors.
The funds will be used to buy property assets such as offices, primarily in Dublin, although potential acquisitions in cities such as Cork, Limerick and Galway will also be considered.
The new investment vehicle, Green REIT, will also be the first such entity to secure a listing on the Irish Stock Exchange. It will also be listed in the UK.
The REIT is the first vehicle of its type established in Ireland following the introduction of new legislation in the latest Finance Act.
Green Property chairman Stephen Vernon and the company's managing director, Pat Gunne, as well as other senior executives, will invest a total of €10m in the new REIT and will commit to retaining their holding in the REIT for at least three years.
Green Reit said that its management – including Mr Vernon and Mr Gunne – believe "there are indications of recovery in certain segments of the Irish commercial property market".
Green added that management believe there's an opportunity to build a high-quality portfolio of prime and good secondary commercial assets with "strong income and added value characteristics".
It intends to acquire assets at price ranges of between €10m and €50m. There has been intense interest in Dublin's commercial property market in the past year, with foreign investors buying assets such as the Burlington Hotel and the Morrison Hotel.
REITs have become a widely used method for investing in property, with shares in the quoted entities being tradeable exchanges just like shares in ordinary listed companies. They enable investors to participate in the property market without having to directly own assets.
Institutional investors will comprise the main investors in the REIT, with interest expected from a wide geographic area.
"The board believes the company will give shareholders the opportunity to take advantage of the re-pricing of assets that has occurred within the company's target categories of investment properties," according to Green Reit.
Speaking to the Irish Independent, Mr Vernon and Mr Gunne said the money raised would be leveraged, but it's unlikely to be done so on a large metric so as to ensure risk remains balanced.
Under legislation, REITs are limited to maximum gearing levels of 50pc. They added that the main focus will be office space in the Dublin 2 and 4 areas, but that retail and industrial space will also be considered for acquisition.