Irish property experts have devised a unitised vehicle that seems close to winning regulatory approval. Doug Payne reports.
The Irish Property Unitisation Association says it is “on the point of breakthrough” in its efforts to create a single-property vehicle which would be listed on the Dublin Stock Exchange. The first fund could be launched early next year.
William Nowlan, chairman of the association, told a conference in Dublin last month that the proposed scheme would be based on the use of rent charges, entitling owners of shares in the building to participate in rental and capital income.
“Each rent-charge holder will have his right to charges on the property but be free to deal with his own unit without reference to any other unit holder,” said Nowlan. Income from rents and capital gains would be distributed gross and “taxed in the hand of the individual owner”. The scheme had been “discussed in principle with the Revenue Commissioners”, he added.
The Department of Finance said the issue “has yet to be considered” by the Irish government, but Brian Davy, chairman of Davy Stockbrokers, commented that he expected final approval before the end of the year, with the first offering in early 1998. Agreement had been reached with the Dublin Stock Exchange as to the method of price reporting and settlement, added Nowlan.
The scheme aims to take advantage of the growing interest in unitised property investment. Real Estate Investment Trusts in the US remain the best known such market, now valued at $90bn, while Australian Property Trusts are capitalised at about A$20bn.
In Europe, Property Unit Trusts (PUTs) in the UK offer a broadly similar scheme for pension funds, while tax transparent funds are listed in the Netherlands and Belgium. The German open-ended funds offer private investors some of the same advantages.
