The way things are going in Ireland and Britain, we might soon be lucky to have any property companies listed on the stock markets. Dunloe Ewart is apparently well on the way to being taken private by Noel Smyth, while a similar move is seen as the most realistic one for Stephen Vernon and Danny Kitchen at Green Property as they consider the various options.
The problem for property companies is not that they trade at discounts to net asset value (NAV) - that's taken as read for these sort of companies. Their problem in the current environment is that they are trading not at a 10 per cent discount to NAV, but at up to 20 per cent and, in some cases, up to 30 per cent.
That represents poor value for shareholders and the directors of property companies are entirely correct in looking at options that will provide a better return. Whether that involves management buyouts, going private or whatever is immaterial.
And lest anybody think that Dunloe Ewart and Green are being victimised by the London market because of their domicile, Current Account was interested to note that two British property companies are planing to go private, citing the size of the discount to assets and the "complete lack of interest from the market".
Raglan Properties - now worth little more than £51 million sterling (€63.99) - is being taken private in a joint venture with the Hong Kong group Kwong Hing, while Eskmuir is being bought back by the Laing family, just two years after it floated on the market.
That follows the £1.9 billion takeover of MEPC by the British Telecom Pension Fund and GE Capital and another move by developers Nigel Wray and Nick Leslau to liquidate their Prestbury property company and distribute the cash to investors.
It's one of the inconsistencies of an economic and property boom that property companies are viewed so negatively by the market. From the companies' point of view, why go to the bother of building up assets if the market is going to value those assets at 20 per cent less than their value.
Of course, it's not a problem exclusive to property companies, with good-quality small and midcap Irish companies having to put up with pitiful earnings multiples. Clondalkin has already flown the coop back to the private sector, Adare is on the brink and others will undoubtedly follow.
While on the subject of Adare, a denouement seems close with Nelson Loane likely to fight off the last-ditch effort by Peter Lynch to resurrect his MBO with a different financial backer. It seems the Adare board is not convinced the latest Lynch offer is "tangible enough" to halt the process which may soon see the board grant exclusivity to Loane and freeze out other approaches.
