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Impressive return by IPUT bodes well for 2005April 13 2005
Irish Property Unit Trust (formerly IPFPUT) has followed through an impressive 12.3% return last year with a strong first quarter performance - auguring well for 2005 prospects.
Chairman Conor Sexton presented a compelling case at the latest annual meeting on why commercial property is one of the mainstays of a balanced investment portfolio. The IPUT property portfolio valuation at end December 2004 was €572.8m compared with €539m 12 months before.
“It may be somewhat premature to predict the likely returns for 2005, but it would not be unreasonable to suggest that returns of the order of 8% to 10% are distinctly possible,” Mr Sexton commented.
Quizzed on recent performance, IPUT chief executive, Gus MacAmhlaigh, revealed that a capital return of 4% had already been achieved in the first three months of this year, hopefully signalling a return into double digits for 2005.
In 2004, the annual report reveals that the capital return for the IPUT portfolio as a whole was 6.2%, with the retail sector once again the best performing area (20.1% growth). The office sector made an improved contribution of 8.7% to overall capital growth, whilst performance from the industrial sector at 10.8% was boosted by a strong element of rental growth.
IPUT’s 12.3% return for 2004 outperformed the 10.4% average for pension investments generally. The report reveals that the trust is well advanced in due diligence in respect of several substantial office and retail investments.
This includes the acquisition of the developer’s interest in the offices pre-let to 02 at Sir John Rogerson’s Quay.
“Considerable” portfolio rebalancing, including sales of older office properties, is likely as a result of this strategy. A fresh issue of units may also be made in the coming months to prospective new unit holders.
“In effect, we would be replacing older, 1970’s office stock with new office investments that by virtue of their respective lease terms, location factors, etc possess relatively superior investment characteristics that will provide the trust with greater longer term performance prospects”, Mr Sexton comments.
IPUT activity last year included new lettings in Swords Business Campus to Hartford and Rockwell and a letting in Alexandra House to BskyB. Letting terms have also been agreed since the beginning of this year for office space in Fitzwilton House, Unit 4a Airside Retail Park, Unit M1 Furry Park and further office space at Swords Business Campus.
Yields on the market value of the trust’s properties were as follows: office 5.7%; retail 2.9%; industrial 5.9% and overall 4.9%.
The Chairman points out in his annual statement that the change in the title of the trust to IPUT confirms that the trust is not exclusively available to pension funds. This has led to a number of enquiries from large charities, some of which may become unit holders in the near future.