Kennedy Wilson Europe ‘fired up’ by Irish opportunities

The head of property group Kennedy Wilson Europe has said it has been "business as usual" for the company and its UK tenants since the Brexit result while also predicting that Dublin could benefit from some companies relocating their operations.

Speaking to The Irish Times, Mary Ricks, KWE's president and chief executive, said KWE had signed nine leases in the UK following the Brexit result. In addition, it was not exposed to financial tenants in the City of London or Canary Wharf.

“We’re excited about how our leasing has gone, it’s been robust and on the sales side we’ve sold 68 assets, three of them post the vote and we’ve hit our £300 million disposal programme,” she said.

Irish portfolio

The London-listed fund said income derived from its Irish portfolio declined during the first half of 2016, falling from £73.9 million (€87 million) to £69 million (€81 million).

Irish-derived rental income totalled £19 million at the end of June, compared with £13 million for the same period a year earlier. Hotel revenue was unchanged at £2.8 million.

In terms of the impact of Brexit for KWE's Irish business, Peter Collins, a Dublin-based senior executive with the company, acknowledged that it carried "some risks for the overall Irish economy" but said Dublin, "certainly in the short to medium term, might be the beneficiary".

“It would be our expectation that Dublin could pick up some incremental business and that would be positive for our office and our residential business,” he said.

Mr Collins said there were no active discussions under way with potential tenants. “It’s too early to see any discussions or negotiations just yet. But we would expect to be a short-term beneficiary on the office and residential side.”

After the half-year end, KWE completed a lease deal with Bank of Ireland for Baggot Plaza and began letting apartments in Block K of its Vantage development near Leopardstown. Ms Ricks said those two assets would add £9 million annually to the company's bottom line.

“We’re very pleased with that result,” she said.

Staying in London

KWE has its own regional headquarters in London, with certain functions being performed in Dublin. But Ms Ricks said the company was not looking to relocate its London operations to Dublin following the Brexit vote.

“We’re paying out in sterling and we’re going to be always headquartered in London,” she said.

Ms Ricks said Ireland’s projected economic growth of 3-5 per cent a year in the near term was “pretty stellar”.

“It’s the fastest-growing economy in Europe and I would say we’re pretty fired up about it still.”

Mr Collins confirmed KWE is developing a plan for a mix of retail and residential on the 2.2-acre Leisureplex bowling alley site in Stillorgan, south Dublin, which it acquired in April for £11.9 million. This is directly opposite the Stillorgan Shopping Centre, which KWE also owns.

“That site is zoned mixed use, so it would seem to us that the most obvious uses would be a combination of retail and rented residential. We haven’t gone in for planning yet but we’ll be developing our plans in the coming months.”

The company, which also operates in Italy and Spain, saw its adjusted net asset value rise 5.1 per cent to €1.2 billion over the first half.

Operating income

Group net operating income rose 35 per cent to £78.7 million in the first six months of the year.

Its portfolio was valued at £3 billion with annualised net operating income of £161 million, a 95 per cent occupancy rate and weighted average unexpired lease term of seven years at the end of June.

Ireland accounted for 30 per cent of the value of KWE’s portfolio in the first half of the year and 22 per cent of its income.

Bank of Ireland (at £3.8 million) and Irish law firm Mason Hayes & Curran (£2.8 million) are among KWE's top 10 clients in terms of lease income.

Five Irish assets feature in its top 10. These are: Baggot Plaza, 40/42 Mespil Road, Russell Court, Vantage/Central Park and the Stillorgan Shopping Centre.