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The New REIT in Town

Hibernia REIT is Ireland’s second REIT which listed in December 2013, raising €365 million. It aims to assemble a portfolio of high quality income-producing properties which are mainly commercial and in the Dublin area.

Green REIT was Ireland’s first REIT which listed in July 2013, raising over €300 million. In October 2013, Green REIT announced that it had exchanged contracts for the acquisition of a commercial property portfolio for €127.6 million with an initial yield of in excess of 8.5% and the acquisition of a further two commercial properties in Dublin for €50.7 million.

REITS are corporate entities that buy, develop, manage and sell real property. Qualifying income and gains of a REIT are exempt from corporation tax at the level of the REIT company. The REIT is required to distribute profits annually. Therefore, they allow participants to invest in a professionally managed portfolio of real property providing an after tax return for investors similar to that of direct investment in property.

The REIT model is attractive to large scale institutional investors worldwide.  It is seen as a lower risk property investment model for the following reasons:

  • Diversification of investment into a pool of properties
  • Reduced exposure to negative equity risk and protection of income stream to investors due to limits placed on borrowings by REITs
  • Liquidity for investors arising from the ability to sell shares in a listed REIT at any time

They are also attractive for small investors given that they can participate in the property market for the price of a single share with access to returns from high quality investments which may have previously only been an option for large investors.

William Fry advised Nowlan Property REIT Management Limited in its successful application for authorisation by the Central Bank of Ireland in accordance with the Alternative Investment Fund Managers Directive (AIFMD).  This represents one of the first AIFM applications to be approved by the Central Bank and we believe the fist AIFM authorisation to be granted to a manager of a REIT in Europe. Nowlan Property REIT Management has entered into an agreement to act as manager to Hibernia REIT plc and William Fry acted for the management team in all aspects of this project.  The AIFMD authorisation enables Nowlan Property REIT Management Limited to avail of a pan-European passport to market shares in Hibernia REIT plc to professional investors in selected jurisdictions in accordance with the AIFMD.  

Click here and here for previous articles on REITs.

Contributed by Tara Rush and Paul Murray.

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