Brexit boost for Kennedy Wilson’s Irish portfolio

Kennedy Wilson Europe highlighted that its Irish property investments are likely to be buoyed by Brexit as the London-listed property company reported a £77.6 million (€91.9 million) drop in the value of its British holdings.

“Dublin is expected to benefit from potential job relocations from companies seeking to realign their geographic footprint after the EU referendum,” the company said as it reported 2016 results on Friday. “A number of UK-based financial services firms have already announced that they have either settled on Dublin as their new EU base, or are seriously considering it.”

Kennedy Wilson was among the first overseas investors to dip its toe into the Irish market following the 2008 crash, initially buying Bank of Ireland’s real estate business before taking a small stake in the then-beleaguered Irish investor as it raised money to shore up its balance sheet. The Californian-based company floated Kennedy Wilson Europe in 2014, mainly comprised of UK holdings. Irish, Spanish and Italian properties currently account for 44 per cent of its portfolio.

Irish portfolio

Its Irish portfolio includes the Stillorgan shopping centre,

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Portmarnock Hotel

and Golf Links, Baggot Plaza office building in Dublin 4, and numerous multi-unit residential rental developments in the capital.

The group handed over the keys on the 129,300sq ft (12,000sq m) Baggot Plaza development in July under a 25-year lease at a “headline rate” of €47.50 per sq ft, it said.

It also obtained planning permission to build a new extension unit of 11,000sq ft to the 142,300sq ft Stillorgan Village Centre shopping complex and signed a new 25-year lease with its main anchor tenant, Tesco, it said.

However, Kennedy Wilson warned that a move by the Government in the Finance Act 2016 to tax Irish property assets held in special purpose vehicles and funds, following political pressure, “may affect the general investment appetite for Irish real estate and create negative investor sentiment”.

Rental income

Rental income from properties in Ireland rose to £42.7 million in 2016 from £29 million a year earlier.

Bank of Ireland

is the group’s second main tenant, after the Italian government and ahead of

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Group and

British Telecommunications

in the UK.

The group’s Irish assets had a fair value of £826.2 million at the end of December, while its UK holdings stood at £1.52 billion, according to the accounts.

Adjusted earnings for the group rose by 14 per cent last year to £74.1 million, driven by acquisitions during 2015 and 2016 as well as a record year for leasing activity for the company.