Two real estate investment trusts set to raise €600m on Irish Stock Exchange

Two property investment companies plan to raise a total of about €600 million on the Irish Stock Exchange through Real Estate Investment Trusts (REITs).

Irish Residential Properties REIT, which is owned by a Canadian company, signalled that it plans to float on the Dublin market and raise about €200 million.

The firm, which is a subsidiary of Toronto-based Canadian Apartment Properties Real Estate Investment Trust, follows Hibernia REIT and Green REIT onto the Irish Stock Exchange, but unlike those two trusts, its investment strategy concentrates mostly on residential apartment blocks.

The company said it would focus on buying and managing investments in the apartment blocks in urban areas across in Ireland.

It began operating last September when it bought four apartment blocks in Dublin for about €42.2 million. This initial portfolio will comprise 338 residential units across the four properties, which were valued by CBRE at the end of 2013 at €45.5 million.

Meanwhile, Green REIT plc has announced its plans to raise €400 million through the issue of almost 360 million new shares at a price of €1.12.

The issue price reflects a 5.5 per cent discount to its closing price on April 3rd.

The company said the net proceeds of the exercise would be used to fund further property investments. A prospectus containing details of the capital raising will be published on Monday, and an extraordinary general meeting will be held to approve the move on May 1st.

Green REIT was the first real estate investment trust in Ireland, raising gross proceeds of €310 million last July in an over-subscribed issue of shares. Its investments since then include the acquisition of a portfolio of ten investment properties from Danske Bank for €127.7 million, as well as the purchase of development land close to Dublin Airport.

"We have now successfully deployed €335 million of equity and debt over a nine month period - consistent with our stated strategy," said chairman Gary Kennedy. "Our objective now is to raise additional capital to grow the size of our portfolio, enhance our income stream and drive shareholder returns."

The Irish Residential Properties REIT’s stock is expected to begin trading on April 16th and the company is targeting a total annual return of 10-15 per cent and a target dividend yield of 4.5-5 per cent. Investec Bank and TD Securities have been appointed as joint bookrunners in connection with the stock placing.

The parent company is one of the largest holders of residential rental REITs in Canada, where it owns and manages more than 41,200 units.

It said there was an opportunity to build a residential rental portfolio in Ireland, citing “improving economic conditions and demographic trends”, as well as “a lack of significant institutional ownership in the residential property rental market” and the prospect of significant asset sales by State agency Nama and financial institutions.

Irish Residential Properties REIT chairman Colm Ó Nualláin, a former finance director of Grafton Group, described the "favourable investment prospects" in the sector, together with the "investor-friendly REIT structure", as "compelling".