REIT investing now becoming even more accessible according to City Life: Wealth Advisors

REIT investing now becoming even more accessible according to City Life: Wealth Advisors

Real Estate Investment Trusts, or REITs, are at the tip of people’s tongues at the moment, as they offer the opportunity to marry the convenience and liquidity of stock market investing, with the well-known love affair that Irish people have had with bricks and mortar.

With Ireland’s third REIT soon to be launched, City Life: Wealth Advisors has seen a surge in interest in this relatively new investment option that was introduced to Ireland following Michael Noonan’s 2013 Budget speech in which he announced that he would introduce legislative changes to enable REITs to be introduced.

Relatively new to Ireland, REITs allow investors to get exposure to top quality property through shares, making them a very efficient investment option for investors. REITs are property companies which are traded on a stock exchange and hence are valued daily. The properties include, but are not limited to, offices, shopping centres, and warehouses, as well as commercial sites for development opportunities. They are likely, over time, to exhibit investment returns that reflect the performance of the properties they hold, although they might exhibit short term volatility, more like the stock-market, from time to time. 

Eamon Dwyer, Managing Director of City Life: Wealth Advisors says “There is an element of what’s new is wonderful with this particular investment option, and some of their features will certainly tick a few boxes, if they are used within a portfolio and used sensibly. We are seeing a good deal of evidence now to support the fact that Irish property, specifically high quality Dublin property, is recovering strongly and that the market seems to have turned a corner at least a year ago.”

The essential points to note are that REITs must distribute 85% of their property related income, after management fees, to the shareholders by way of dividends; they must generate 75% of their income from property rental; and they cannot have a loan to value ratio of more than 50%.

Eamon continued “The ability to get in and get out of REITs relatively efficiently has a large appeal currently, following the inability of many investors to exit property investments over the past 5 years.  This same ability to get in and out easily might beg the question ‘can I access these investment options easily though a pension plan or a monthly savings plan?’ Up until recently there wasn’t an off the shelf solution but now there is.”

As of earlier this month, one insurance company has led the charge. Zurich Life, who never opened a bricks and mortar fund of its own, even during the boom years, has decided to open a fund which will invest in Irish REITs. This fund will become more and more interesting as more REITs are opened in Ireland, but for now, the company will invest in the two existing REITs (Green REIT and Hibernia REIT), and manage the exposure to each as the fund managers see fit. The gains/ losses of the two REITs being held by the fund can be offset for tax purposes within the fund, and the fund can be used as part of a tax efficient portfolio accessing the entire Zurich fund range.

“If you want to invest in the Irish property story, and more pointedly, the REIT story, thereby not having to worry about tenancy risk, liquidity risk, title, conveyancing or complicated structuring, the Zurich Fund of REITs might be suitable. But before investing in REITs you should consider whether it meets your investment objectives and risk profile by consulting with a financial advisor.” Eamon added.

The City Life model portfolios recommend limiting one’s exposure to REITs at 10% of even a reasonably aggressive portfolio. Whilst the upside potential for an Irish REIT fund is good, the volatility of same and the focused nature of the investment strategy should suggest taking heed of such a discipline.

For further information on the Zurich’s Fund of Irish REITs, contact City Life at or (021) 4358533.

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