irish reits

joe sod

Frequent Poster
There doesn't seem to be much discussion on irish reits with regards to investors viewpoint. Maybe it would be good to get a brief discussion on them, without trying to push them as investments. I know we are not allowed to discuss individual stocks but maybe discuss irish reits in general. There are three as far as I know, Ires , Hibernia and Green. Even though Ireland is known for its preoccupation with property investment there seems to be little interest in reits by irish investors. Well thats just my thinking anyway.
 

rob oyle

Frequent Poster
And as a proxy for Irish property prices, they've proven to be a lousy tracker of market trends, which kind of negates them as consideration as a substitute for direct property investment.
 
Just to clarify the Posting Guidelines

"11 We don't discuss individual shares
You won't find any messages suggesting investing in CRH or asking if AIB is a good investment. It is not the purpose of Askaboutmoney. We don't facilitate stock tipping or speculation about the future performance of individual shares. There are other forums which discuss individual shares such as The Investments and Markets Forum of boards.ie

This guideline does not restrict you from discussing
1) the mechanics of buying or selling shares in a flotation
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Joe's general question does not breach these guidelines.

Should someone who is considering investing in Irish property, buy a REIT instead?
Should someone saving up for the deposit on a house, consider the I-RES Reit.

I have suggested before that someone who is saving up for the deposit on a house could invest in the I-RES REIT. If house prices rise, the value of their investment will rise. If house prices fall, the value of their investment will fall. Whereas if they leave their money on deposit, they could be left behind by a rise in property prices.

But others have pointed out, as rob oyle has, that the price of Ires REIT has not risen in line with Irish property prices.

Here are some previous discussions on Askaboutmoney

Irish REITs August 2015

Interesting investment to consider with your deposit money - a residential REIT
 

SBarrett

Frequent Poster
You have to remember that they are publicly traded companies and any volatility in the stock market will have an effect on their price too. You also need to look into the cost of them. I know some fund managers won't touch them because they are too expensive.


Steven
www.bluewaterfp.ie
 

joe sod

Frequent Poster
You have to remember that they are publicly traded companies and any volatility in the stock market will have an effect on their price too. You also need to look into the cost of them. I know some fund managers won't touch them because they are too expensive.


Steven
www.bluewaterfp.ie
How do you mean too expensive, in terms of the management fees. Are the irish ones more costly than their international counterparts or do you mean that reits are too expensive in general?
 

MrEarl

Frequent Poster
Hello,

I remember speaking with a friend from England a few years ago and he was of the view that the UK guys had never set the world on fire..... with his ultimate conclusion being that too much was being absorbed by salaries, PLC reporting requirements etc. etc. As such, they were never likely to get very close to reflecting what was happening in the property market (in terms of annual capital growth etc.). Could the same be said for the Irish REITs ?
 

joe sod

Frequent Poster
Hello,,

I remember speaking with a friend from England a few years ago and he was of the view that the UK guys had never set the world on fire..... with his ultimate conclusion being that too much was being absorbed by salaries, PLC reporting requirements etc. etc. As such, they were never likely to get very close to reflecting what was happening in the property market (in terms of annual capital growth etc.). Could the same be said for the Irish REITs ?
ok but is there not the same issue with investing in a fund or investment trust, a certain percentage goes in fees to pay for the management of the fund. If you invest in property directly then your own costs in terms of time, bad tenants etc are borne by you but are not represented in the property price index. If you invest in an reit a small percentage is lost because of bad tenants in the whole fund, however as a private investor you will either have no bad tenants therefore zero cost or one bad tenant that destroys the property therefore substantial and devastating costs.
 

Setanta12

Frequent Poster
I came across REITs a few years ago when I interviewed for a job with them. There are more than the few routinely mentioned in the papers including some which specialise in data centers for the larger American MNCs. These can be quoted but at the time when there were none in Ireland, they were US listed but primarily used as investment vehicles for (US) pension funds.

As they are a relatively new phenomenon in Ireland, I expect that the managements fees (salaries) are excessive, especially when compared to international REITs - but this is just speculation on my part. Interestingly I found that the benefits behind them (and why Ireland brought in its legislation) was that REITs are subject to lower taxation overseas as they must divvy out practically all their profits - I expect Irish legislation is broadly similar to allow level-playing-field competition .. ..

(Happy to be corrected on the above)
 

joe sod

Frequent Poster
Im still amazed by how little coverage there is of irish reits given how infatuated irish people are with property. The only headlines are negative ones trying to tar them with the "vulture fund" brush. Im not trying to push them either i just be interested in a bit more discussion
 

MrEarl

Frequent Poster
Im still amazed by how little coverage there is of irish reits given how infatuated irish people are with property. The only headlines are negative ones trying to tar them with the "vulture fund" brush. Im not trying to push them either i just be interested in a bit more discussion
Hello,

I suppose you are right to a degree regarding the level of coverage there is on Irish REITs, but there's a couple of key considerations as I see it:

  • A lot of people were burnt badly by the previous property crash, so may be slow to return to the concept of investing in property syndicates (in any shape or form). Those interested in investing in property may rather personal direct investment, with or without leverage, or to create their own small personal syndicates to invest directly (which can cause other problems, but we won't digress ;))
  • Most people have exposure to property through homeloans, through their pension funds etc. so is it right for them to consider further exposure into Irish property via REITs or should they be looking at other types of investment, to diversify their investments ?
  • Then there is also a further consideration regarding the growing part of the population who are exposed to the industry through their employment - be it directly (i.e. a construction worker), or indirectly (i.e. solicitor who gets most of their work from property transactions).
  • There may be a a feeling that REITs are not going to benefit the investors, to anything like the extent that they benefit their principals and other parties in the property industry, such as the property agents, the law firms, the architects and so on. This may view may be right or wrong, I have not put enough research into it to be honest but I can see why it might exist.

Personally, I think we as a nation need to learn / remember that Property Investment is one of many types of investment and is an alternative investment category, just like if we were to invest in hedge funds, or in forestry and so on.

All things being equal, we should be giving as much time to discussion on Property REITs, as investing in Forestry, Green Energy and so on.... its only a shame that little old Ireland doesn't have quoted (and publicaly listed) companies investing in such things.
 
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joe sod

Frequent Poster
just resurrecting this thread seeing as green reit is considering liquidating its property assets and returning the capital to its shareholders. Their reasoning is that the share price is not reflecting the true value of the assets it has on its books. Is it not a bit crazy that people are jumping over each other to buy properties in dublin yet wont by underpriced shares in reits?
 

Jim2007

Frequent Poster
Is it not a bit crazy that people are jumping over each other to buy properties in dublin yet wont by underpriced shares in reits?
No because it does not give you the proper type of diversity you should be looking for in a Euroland REIT and on top of which it is basically a penny stock, so it should have no place in the portfolio of most investors.
 

MrEarl

Frequent Poster
I actually think they (Green) are getting out, while the going is good ....

I don't think there's opportunity for much further uplift in that portfolio over the next 5-8 years, with risk of a recession during that time period also to be considered.

New stock doesn't come cheap, and is proving more and more difficult to come by etc.
 

joe sod

Frequent Poster
No because it does not give you the proper type of diversity you should be looking for in a Euroland REIT and on top of which it is basically a penny stock, so it should have no place in the portfolio of most investors.
Is that not the case for most stocks on the irish stock exchange, they are not large cap ? The definition of a penny stock is one whose share price is in the cents after massive dilution, that was the case for the irish banks back in the day, its certainly not the case for green reit. Afterall the reason they are considering liquidating their assets is because the share price does not reflect the property it owns.
 

galway_blow_in

Frequent Poster
No because it does not give you the proper type of diversity you should be looking for in a Euroland REIT and on top of which it is basically a penny stock, so it should have no place in the portfolio of most investors.
lots of people do well out of property investing despite touching it being blasphemous to disciples of orthodox investing, we must deal with how things really are, REIT, s do seem like an interesting option as the rules of the game have changed pretty dramatically for single property landlords
 

galway_blow_in

Frequent Poster
Is that not the case for most stocks on the irish stock exchange, they are not large cap ? The definition of a penny stock is one whose share price is in the cents after massive dilution, that was the case for the irish banks back in the day, its certainly not the case for green reit. Afterall the reason they are considering liquidating their assets is because the share price does not reflect the property it owns.
Strict orthodox investors believe not a single publically listed Irish company should be on investors radar, that kind of view is little help to anyone as people buy stocks in Irish companies and that's it, calling Irish REITs " penny stocks" is just hyperbole, while small relative to DOW components, the half dozen Irish REITs are not some obscure miners with not a cent in earnings,they own hard real assets
 

joe sod

Frequent Poster
There seems to be a lot of bad publicity in relation to reits lately. There is a concerted effort against them, now referring to them as "cuckoo funds". However why are buy to let investors not referred to as "cuckoo investors", it's the same logic even if totally false. The fact is that these funds are actually building apartment blocks that are needed. Most Irish developers do not have the capability or capital to build these and the state is certainly not capable of doing it. As far as I can see most residential development happening in Ireland is still one off houses in the countryside or small estates at the edges of towns. It's also a fact that the government invited in reits and funds to invest in the Irish property market when it was on its knees .
Surely if the government wants to cool down the property shortages, it needs to cool demand since it is incapable of increasing supply. Therefore reduce the ease at which people can migrate to Ireland to do low paid low skilled jobs.
 

galway_blow_in

Frequent Poster
My only real concern about putting money into REITs is the ( perhaps incorrect perception ) question of how much revenue is returned to management - board directors ?
 
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