Brexit an oppportunity for Ireland, says Green Reit

The United Kingdom’s exit from the European Union could have a “positive effect” on Irish real estate, property investment company Green Reit said on Monday, as it reported a 137 per cent annual increase in rental profits.

In the year to June 30th, Green Reit recorded a 10 per cent increase in contracted annual rent to €61.3 million from 21 properties; a 188 per increase in proposed dividend to 4.6 cents per share “reflecting strong performance in the period”.

Net asset value rose by €148.7 million, or by 16.5 per cent, driven by EPRA earnings for the period of €24.8 million, up by 137 per cent, and a positive movement in fair values by €120.7 million.

Green Property Reit Ventures Limited chief executive Pat Gunne said: “Our strong results are a reflection of the continued growth in the Irish economy, and the prevailing low interest rate environment which is supportive of the commercial property industry both in Ireland and abroad.

“The 137 per cent growth recorded in rental profits over the previous year allows us to achieve our dividend objectives ahead of schedule.”

The investment manager, Green Property Reit Ventures Limited, received a performance fee of €13.9 million during the year, down from €20.9 million in 2015.

Portfolio

Now valued at €1.24 billion, Green Reit’s portfolio largely consists of 20 high-grade Dublin offices, with a total floor area of 226,000sq m. It completed lease renegotiations on €14 million, or 23 per cent of total annual contracted rent, including leases with Vodafone Ireland and Pioneer Investments. Almost €10 million in new annual rent secured through new lettings, the largest of which is to Fidelity International in George’s Quay.

Four properties from the Glas collection were sold in the second half of the year at a combined sale price of €74.7 million, compared with a combined purchase price of €42.6 million. This generated a profit before disposal costs of €32.1 million.

Green Reit said total gearing remained low at 19.2 per cent, with cash and undrawn facilities at year end of €121.4 million “providing further capital for growth and development”.

‘Resilient’ market

On the outlook for the Dublin office market, Green Reit said concerns about future oversupply have reduced, as demand in the occupational market has been “resilient”, although this assumes “no significant pull-back in take-up from FDI [foreign direct investment] tenants in particular”.

On the investment front, Green said it was seeing an increase in core capital flow to Ireland for prime assets, and with the continued decline in the risk-free rate “Irish commercial property yields still look attractive on a relative basis despite being close to previous cycle peaks”.

On Brexit, chairman Gary Kennedy said that while it was still too early to tell what impact this might have on the Irish commercial real-estate sector, it could have a positive effect for Ireland, with potential relocations by UK tenants to Dublin and Ireland and increased FDI into Ireland rather than the UK.