More real estate trusts to follow Green onto Irish stock market

More real estate investment trusts (REITs) are poised to follow Green Property on to the Irish Stock Exchange, according to Minister for Finance Michael Noonan.

Green REIT plc will officially list on the Dublin market today, raising €310 million from institutional investors who last week subscribed for shares in the property investment vehicle.

Speaking at a conference to mark its launch yesterday, Mr Noonan said that where “Green has led others are preparing to follow; there are others with advanced plans to launch their own REITs”.

The venture is backed by Green Property and is the first trust of its its kind to launch in the Republic.

The legal and tax framework needed to create such trusts in the first place was included in this year’s Finance Act.

Mr Noonan announced the initiative last December in Budget 2013. Yesterday he rejected criticism of the structure based on the fact that its rental income is not taxed once 85 per cent of it is passed on to investors as a dividend.

“It is not about tax breaks,” the Minister insisted. “It is about tax transparency.”

He pointed out that the investors that receive the dividends then pay tax on that income.

Mr Noonan also argued that the REIT legislation was one of a number of steps that needed to be taken to revive the Republic’s ailing commercial property market.

“I am happy to try 10 initiatives and have seven of them work; that would be a good batting average,” he said, adding that he was not prepared to do nothing while individual sectors of the economy continued to sink.

Urban areas
The trust will combine the cash raised with up to €140 million in borrowings to invest in commercial and industrial property in central Dublin and possibly other urban areas.

Its managers, Green Property's Stephen Vernon and Pat Gunne, say they will focus on the types of properties for which there is a demand, specifically those suited to multi-national investors.

IDA chief executive Barry O’Leary said yesterday there was not enough office buildings suitable for multi-nationals seeking to invest in the Republic.

Mr Vernon, who will chair the REIT’s board, noted yesterday that the previously stagnant commercial property market began a revival last year, when around €600 million worth of business was done.

He predicted that this year that figure would be closer to €1.5 billion, with €600 million in the first half and the balance during the final six months of the year.