John Ronan and Richard Barrett are well on the way to completing their latest and most ambitious billion pound development. Having eschewed a stock market flotation of Treasury Holdings, their property group, the enigmatic duo looks set now to have its cake and eat it.

Today should bring the two men one step closer to the conclusion of a tortuous process that will give them access to the stock market without having to go through the regulatory hoops of opening up their books and becoming a public company. The £800 million sterling (€1.3 billion) vehicle created to achieve this is called Real Estate Opportunities Ltd, or REO. It is a quoted split capital investment trust, and the brainchild of Maurice Harte, who left Allied Irish Investment Managers just under a year ago to head up the property group.

As the name suggests, REO is a quoted investment vehicle which is split between two asset classes, in this case property and high yield bonds. In theory, the weakness of one asset class will be compensated for by the strength of the other, and vice versa, over the 10-year life of the trust. In REO, the property portfolio will provide asset growth while the bonds - which will make up 40 per cent of the fund - provide an income stream to pay dividends. The combination should allow the fund pay an annual dividend of 8.8 per cent a year on the ordinary shares.

The deal is extremely complex, very ambitious and from Treasury's point of view, very attractive.

REO will purchase properties from Treasury and also acquire Jermyn Investment Properties, a quoted British property company in which Mr Barrett and Mr Ronan have a small interest.

Treasury will sell the trust its 50 per cent interest in Castle Market Holdings, a joint venture with Jermyn, for £97.5 million. In addition, it will enter into a new joint venture with the trust, called Havenview, which will buy property worth £64.7 million from Treasury, which will be Irish property advisers to the fund. In return for these valuable, but illiquid, property assets currently yielding 2.3 per cent per annum, Treasury will end up with a 24 per cent stake in REO, a quoted investment vehicle paying 8.8 per cent per year. It will also get to share in the future growth of the property portfolio.

Aberdeen Asset Management, the British investment house which owns 18 per cent of Jermyn, will take a 21 per cent holding in REO. The other 55 per cent of the company will be held by Jermyn shareholders and new investors.

More than £400 million sterling is being raised in equity and debt which will be used to buy £326 million sterling worth of high yield bonds.

Today is the first closing date for REO's takeover offer for Jermyn, but the convoluted process will not be complete until June 22nd, when REO will start trading. When it is finished, Treasury will finally have access to the stock market - albeit through a circuitous route.

Convoluted though it may be, the clever financial engineering involved in REO has allowed Treasury float off some of its property assets at a premium to the price they would get if they were put into a conventional quoted property vehicle.

Small quoted property companies are very much out of favour at the moment. Both of Treasury's quoted Irish peers, Green and the troubled Dunloe Ewart, trade at discounts of up to 40 per cent on the value of their assets. Jermyn itself traded at a discount of around 25 per cent to its asset value, prior to the announcement that it was in takeover talks.

REO, on the other hand, is paying 23.5 per cent above the pre-talks price, and the uplift in the Jermyn price is also reflected in the price of Treasury's 50 per cent of CMH.

Treasury and Aberdeen believe that the combination of the Jermyn and CMH property assets and high yield bonds in REO can sustain a share price that will make the purchase price of Jermyn and Castle Market Holdings seem reasonable. The icing on the cake for Mr Ronan and Mr Barrett is that Treasury has retained its private company status, which is something they clearly value.

Despite their high profile planning battles and swashbuckling image Mr Barrett and Mr Ronan do not particularly like publicity.

Their shyness is understandable given the going-over they got at the hands of the British media in connection with their bid for the Millennium Dome.

As it stands they divulge no more information about their financial affairs than is absolutely necessary. The REO flotation document simply notes that Treasury "directly or indirectly owned and/or operated a property portfolio of approximately IR£990.6 million and a rental income in the region of IR£28.8 million". We are also told that it employs 30 people.

Treasury has decided to remain a private company and as a result is entitled to keep the details of its finances to itself. It may have come up with an imaginative and attractive way to access the stock market, but it still cannot have it all its own way. It may be hard for some investors to have full confidence in REO while an air of secrecy surrounds Treasury, which is its largest shareholder, joint venture partner and Irish property adviser.

jmcmanus@irish-times.ie