Green may convert into real estate investment fund

Green Property chairman and managing director Stephen Vernon has raised the prospect of converting the company into a real estate investment fund (Reit) if the Government moved to facilitate the creation of such funds.

Mr Vernon, who led a 2002 buyout of the company, was speaking on the day that his takeover vehicle Rodinheights filed accounts showing a post-tax profit of €5.58 million in the year to June 2005. The profit was down from €16.05 million a year earlier, but the result in the previous period was flattered by €49.15 million profit on the disposal of properties.

Total payments to directors rose to €11.4 million in the year to June 2005 from €1.14 million. This included unspecified "final payments" to Mr Vernon in relation to the takeover. "The net charge to operating profit in the current period relating to directors' remuneration is €2,463,076," said the accounts.

Mr Vernon said Green's current attention was on development and property acquisition activity. "The focus is very much on Ireland." The return to the property market follows the redemption in 2004 of a stake held by Merrill Lynch, which co-funded the takeover with Bank of Scotland. Mr Vernon and other managers hold 50 per cent of Green following that change, and Bank of Scotland holds 50 per cent.

Green was unlikely to float on the stock exchange if ownership was to change in the medium term, but conversion to a Reit structure would be a possibility if such schemes were introduced in the Republic. "What I'm suggesting is that if Ireland went down that road, it's something we'd look at very seriously, but I'm not saying anything more than that," Mr Vernon said. "We haven't discussed it [with Bank of Scotland]\. All I'm saying is that I'm keeping an eye on it. It's not under discussion."

Such funds stimulated investment in property when introduced in the US, Japan and Australia. They are as designed as tax-efficient collective schemes that invest in properties, giving investors revenue from rental income and capital appreciation from holding the property.

US-based Reits are required to pay at least 90 per cent of their taxable income to their shareholders each year, with the fund deducting dividends paid to its shareholders from its corporation tax. This ensures that an investment in a real estate trust is taxed only once.