Property crash hits WPC income

DUBLIN-BASED property investment group Warren Private Clients (WPC) saw net income decline by 21 per cent last year as a result of the property crash in Ireland, the US and Britain, writes Ciarán Hancock.

Accounts filed recently for the group show that WPC achieved net income of €5.84 million in the year to the end of November 2007 compared with revenue of €7.37 million in 2006.

Founded in 2002, WPC arranges property syndication deals for clients. It has about €2.3 billion worth of property under active management in Europe and the US.

It is headed by Kevin Warren, a former tax inspector and partner with PricewaterhouseCoopers.

The directors' report said WPC completed six deals in Ireland, the UK and the US last year but postponed making some investments in 2007. "The property market was adversely affected by the general downturn in the economic climate following the subprime crisis in the USA," it said.

"During the last quarter, property markets were very volatile and there was an appreciable deterioration in property values. We decided to postpone making investments to take advantage of expected lower prices in 2008."

Looking to the future, the director's say they are "confident that the company's business model is robust and will readily appeal to investors in a more cautious market".

It added that its cost base was managed "extremely efficiently". The accounts show that staff costs declined by 23 per cent last year to €5.2 million from €6.7 million a year earlier even though its number of staff rose by one to 11.

Directors' remuneration declined by 22 per cent to €4.7 million from just under €6 million in 2006.

The directors said the "recent downward adjustment" in property values would present "good buying opportunities" for investors. In June, it emerged that WPC had bought two investment properties in Manhattan for $54 million, comprising a mix or retail, offices and residential.

When staff costs, depreciation, interest charges and other operating costs were taken out, WPC was left with a pre-tax profit of €51,061. This was almost five times the €11,132 surplus in 2006.

A corporation taxation payment of €49,541 last year left the company with an after-tax surplus of just €1,520. Its accumulated profits at November 30th stood at €699,190.

These include the Whitewater Shopping Centre in Newbridge, which was the subject of a high-profile legal dispute with developer Seán Dunne, who was a joint investor in the project.