Hibernia Reit sees more property IPOs as private equity exits

Hibernia Reit sees private-equity firms floating portfolios of shopping centres and other property in the coming years as they seek to exit their investments after a multibillion-euro buying spree following the crash.

The company and rival Green Reit launched initial public offerings [IPOs] in 2013 to raise cash to buy real estate and take advantage of depressed prices after the crisis. However, Hibernia's chief executive, Kevin Nowlan, thinks the opportunity of raising "cash boxes" to follow this strategy has largely been played out.

“If you see a few more [real-estate investment trusts IPOs] in Ireland it may be exits for private equity,” Mr Nowlan told reporters after the company’s annual general meeting in Dublin on Tuesday.

“You can see them coming together and floating an entity with a management team as an exit for some very good buying they’ve done over the past three years. I would say possibly in the retail space there could be some opportunity.”

Demand for retail property has soared in recent years, albeit trailing that for office space, as consumer demand recovers from the downturn. Retail sales, excluding car trades, soared 6.5 per cent in the year to March, according to the Central Statistics Office.

Last year saw New York-based hedge fund Davidson Kempner spend about €118 million on a portfolio of six provincial shopping centres, including the Athlone Towncentre, a stake in MacDonagh Junction in Kilkenny and the Orwell Shopping Centre in Templeogue in Dublin. More recently, Goldman Sachs bought the Bridgewater Shopping Centre in Arklow last month for €33.3 million, while Blackstone has acquired the Blanchardstown Centre in Dublin for about €950 million.

Meanwhile, Mr Nowlan said while it was too early to assess the impact of Brexit on the office market, Hibernia Reit saw itself as well positioned for any activity moving from the City of London in Dublin in the coming years. The company’s joint venture development on Windmill Lane with US investment firm Starwood Capital is due to be completed next year and a neighbouring project on Sir John Rogerson’s Quay will be finished by mid-2018.

“Hopefully we’ve got good buildings coming out just at the right time,” Mr Nowlan said, adding that the company planned to let out floors in both buildings to different firms, rather than the properties as a whole. If business moved to Ireland because of Brexit “you’re probably going to see departmental moves rather than entire corporate moves”, he said.

The real-estate company said a building it owns on Dublin’s north docklands, One Dockland Central, is now fully let, with the Commission for Communications Regulation having signed a €1.6 million-a-year lease on the remaining 2,800sq m (30,200sq ft) of available space in the property.

The group, which is involved in a legal battle to get vacant possession and redevelop the Harcourt Street regional Garda headquarters in Dublin, had net debt of €115 million in cash, and undrawn credit facilities of €307 million, at the end of June.