Core Industrial Reit pulls €225m initial public offering

Logistics and industrial property company backed by US hedge fund

The Iseq index in Dublin has fallen as much as 10.8 per cent since late January. Photograph: Dara Mac Dónaill

The Iseq index in Dublin has fallen as much as 10.8 per cent since late January. Photograph: Dara Mac Dónaill

 

Core Industrial Reit, an Irish logistics and industrial property company backed by US hedge fund York Capital, has pulled its planned €225 million initial public offering (IPO), citing prevailing market conditions.

Market sources said the promoters of the IPO had been considering in recent days scaling back the size of the equity raising before deciding to withdraw the offering, which was expected to complete within the next two weeks. The Iseq index in Dublin has fallen as much as 10.8 per cent since late January.

“Despite encouraging institutional support, Core Industrial Reit has decided not to proceed with its potential initial offering at the current time due to market conditions,” the company said in a brief statement issued after the Dublin market closed. A spokesman for the firm declined to comment beyond the statement.

The Irish Times first reported in January that York was planning the flotation and that it had lined up Daniel Donovan, a former partner with UK property investment firm Grainmarket Asset Management and one-time Lehman Brothers employee, as chief executive.

Dublin-based property figure William Redmond was selected as the company’s chief investment officer. Both men have worked with York Capital in recent years and had been set to benefit from a potentially lucrative incentive scheme at the listed company.

Industrial units

York Capital had planned to put almost €83 million of industrial units it had acquired in Ireland following the property crash into Core Industrial. It also planned to sell about €18 million of shares as part of the IPO, leaving it with a remaining 9.9 per cent stake in the business, which was to have an initial market value of about €250 million.

York Capital’s decision to take a large amount of money off the table as part of the transaction had raised some questions, according to market sources. In addition, Goodbody Stockbrokers analysts said last month that they were “surprised” by the small lot sizes of industrial units – including property in locations such as Rathcoole, Clondalkin and Finglas in Dublin – that York Capital was putting into Reit.

Still, the industrial sector emerged last year as the hottest sector of the Irish commercial property market, delivering total returns of about 14.5 per cent for the 12 months to the end of September, according to the MSCI Ireland Property Index. That compares with a 10.5 per cent return during the same period for the office market, which initially led the property recovery after the crash, and 10.8 per cent for the retail investment sector.