Euro's strength against sterling boosts REO's property portfolio

THE EURO'S strength against sterling boosted the value of properties owned by the Treasury Holdings-backed vehicle, Real Estate Opportunities (REO), during the first six months of the year.

The firm said yesterday that the value of its property portfolio at the end of June was £1.85 billion (€2.3 billion), an increase of 5 per cent on the same time last year.

The increase was down to the euro's strength against sterling during the period, and the company said that this masked a slip in real values.

Treasury Holdings managing director John Bruder said the underlying fall in values was 2 per cent. Overall, net asset values fell 7 per cent to 134.2 pence per share, the company said in a statement. The group reported a pretax loss of £67.95 million for the six-month period, which included portfolio revaluation losses.

REO is a Dublin- and London-listed property investment company in which the John Ronan and Richard Barrett-owned Treasury Holdings holds a majority stake.

The company bought the Battersea power station site in London for €600 million, which it plans to convert to a £4 billion mixed use retail and commercial development. The company is moving ahead with the planning process in conjunction with the local authorities and community.

Robert Tincknell, managing director of the group's UK operations, said it hoped to submit a planning application early next year, although the project faces a lengthy consultation process and a full public inquiry before it goes ahead. "If we get all the necessary planning permission we could be on site by 2011," said Mr Tincknell. However, the project is not likely to be completed before 2020.

REO said yesterday that the credit crunch and economic slowdown was continuing to hit the Irish property market.

In Britain, global conditions and high inflation forced the Bank of England to leave its key wholesale rate unchanged. REO said that British property values were down 4 per cent in the first half and 13.9 per cent in the 12 months to the end of June.

Meanwhile, China Real Estate Opportunities (CREO), the Alternative Investment Market (Aim) company in which REO, Mr Ronan and Mr Barrett all hold stakes, saw the value of its properties grow 18 per cent to £712 million in the six months to the end of June.

CREO is active in Shanghai, Beijing and Tsingdao, and is focused on the commercial and retail sectors. Net asset values were up 26.8 per cent on the £7.68 at which the company refloated on the London market in July last year.

Net asset values for the first six months of the year were up 16.8 per cent at £9.74.

A key development for the group is the Beijing Logistics Park, close to the Chinese capital's airport. CREO expects this to be completed in 2011.

- (Additional reporting, Bloomberg)