Property investment company Real Estate Opportunities (REO) has reported a pre-tax profit of €27.7 million for the first half of this year, following losses of €65 million in the same period last year.

REO is 35 per cent owned by Treasury Holdings, the property group controlled by Mr Richard Barrett and Mr John Ronan. Former Dunloe Ewart chairman Mr Noel Smyth recently acquired a 10 per cent stake.

The company's Irish property portfolio was worth €489.4 million at the end of June. Its British portfolio was valued at €171 million, while the fixed-income portfolio was worth €38 million .

Six properties were sold during the period, five in Britain and one in the Isle of Man. The disposals realised €9.8 million, a net profit of 13 per cent.

REO said the Irish market began to pick up in the first six months of 2002, with recovery in the office market after two years in decline especially significant.

In a statement, the company said: "Growth is focusing particularly on the value of good-quality investment properties with investors competing strongly for such limited opportunities as become available and against the background of euro interest rates at an historic low.

"Despite a recent slowdown in absolute levels of growth, Ireland is still forecast to produce economic growth over the next three to five years higher than the average for the EU. Against this background we believe there are attractive opportunities for REO's development portfolio supporting an investment portfolio that is well let to strong convenants."

In Britain, a strong retail market has partially compensated for a downturn in the occupier market.

REO said: "While the occupier markets in the office sector particularly are suffering, the same is not true of retail. Whether it be high streets, shopping centres or retail warehousing, many occupiers are trading well, with some looking to expand."

The company's bond holdings increased in value from €26 million to €29 million.