# irish reits



## joe sod (14 Feb 2017)

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.


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## rob oyle (14 Feb 2017)

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.


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## Setanta12 (14 Feb 2017)

rob oyle said:


> they've proven to be a lousy tracker of market trends



Oh !?  How so ...


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## Brendan Burgess (15 Feb 2017)

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
2) Rights issues - pricing and mechanics
3) Dividend Reinvestment Plans - pricing and mechanics" 

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


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## Brendan Burgess (15 Feb 2017)

Coincidentally, they have just released their results 

*State’s largest private landlord enjoys 52% jump in profits *


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## Steven Barrett (15 Feb 2017)

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


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## joe sod (15 Feb 2017)

SBarrett said:


> 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?


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## MrEarl (15 Feb 2017)

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 ?


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## joe sod (16 Feb 2017)

MrEarl said:


> 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.


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## Setanta12 (16 Feb 2017)

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)


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## joe sod (23 Apr 2017)

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


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## MrEarl (24 Apr 2017)

joe sod said:


> 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 (16 Apr 2019)

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?


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## Jim2007 (16 Apr 2019)

joe sod said:


> 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.


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## MrEarl (17 Apr 2019)

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.


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## joe sod (17 Apr 2019)

Jim2007 said:


> 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.


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## galway_blow_in (17 Apr 2019)

Jim2007 said:


> 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


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## galway_blow_in (17 Apr 2019)

joe sod said:


> 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


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## galway_blow_in (20 Apr 2019)

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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## Jim2007 (20 Apr 2019)

galway_blow_in said:


> 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



And this kind of nonsense is exactly why Irish households lost more in personal wealth than most other countries...


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## galway_blow_in (20 Apr 2019)

Jim2007 said:


> And this kind of nonsense is exactly why Irish households lost more in personal wealth than most other countries...



So because some Irish investors lost money on property, you completely write it off forever as an investment?


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## Gordon Gekko (20 Apr 2019)

Irish investors in property were wiped out in the following scenarios:

- Good assets but too much borrowings

- Bad assets

- Bad assets and too much borrowings

Someone with good assets and a prudent level of borrowing should always be fine.

The REITs have rules around borrowing and they are diversified, albeit within that asset class.


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## galway_blow_in (20 Apr 2019)

Gordon Gekko said:


> Irish investors in property were wiped out in the following scenarios:
> 
> - Good assets but too much borrowings
> 
> ...



Heard it said that the dividend yield is no better than on a diversified equity fund and as such is not a runner due to sector concentration ?

Many of the American Big REITs appear to have 5% yields


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## Jim2007 (21 Apr 2019)

galway_blow_in said:


> So because some Irish investors lost money on property, you completely write it off forever as an investment?



Except it was not some people it was most people.  And the was majority lost not because of the recession nor the banking crisis but because they ignored the basic rules.  And the exact same thing will happen again, the build up is already under way.


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## galway_blow_in (21 Apr 2019)

Jim2007 said:


> Except it was not some people it was most people.  And the was majority lost not because of the recession nor the banking crisis but because they ignored the basic rules.  And the exact same thing will happen again, the build up is already under way.




Sorry, over what time period are you referring to, surely most people did not loose if you go back twenty years, I ask because with respect of equities, the received wisdom is you must take a long term view.


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## AlbacoreA (21 Apr 2019)

Are we talking about property in general or still talking about reits


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## joe sod (21 Apr 2019)

AlbacoreA said:


> Are we talking about property in general or still talking about reits



Well seen as reits are essentially an investment in property, we are discussing both really, like most discussions in veers into other areas also. I brought up the issue of the bad mouthing of reits which is happening now, a peculiarly Irish phenomenon I think.


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## AlbacoreA (21 Apr 2019)

Two types of complaints. 

1 The rules favour them. 
2 Do they give a good ROI.


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## DeeKie (22 Apr 2019)

Is it a good idea to consider these now as a fresh investor? Is there a minimum investment amount to make them work?


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## Jim2007 (22 Apr 2019)

AlbacoreA said:


> Two types of complaints.
> 
> 1 The rules favour them.
> 2 Do they give a good ROI.



You missed one... not a single one of them are suitable for including in the portfolio of most Irish investors.


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## galway_blow_in (22 Apr 2019)

Jim2007 said:


> You missed one... not a single one of them are suitable for including in the portfolio of most Irish investors.



Why not?

They hold prime location assets.

Is it because they don't pass muster when it comes to the orthodox investors handbook ?


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