UK property company Henderson Park Capital is weighing up the sale of certain assets within the Green Reit portfolio following the completion of its €1.34 billion acquisition of the company.
While Henderson has yet to decide which assets it may dispose of once it secures ownership of Green Reit, a number of industry sources suggested the London-headquartered company could look to offload up to 50 per cent of Green’s property portfolio once it secures ownership.
Henderson Park reached an agreement to acquire Irish commercial property group Green Reit on Wednesday in a deal valuing the company at €1.34 billion.
In a notice to the stock exchange the company said each Green Reit shareholder will be entitled to receive €1.9135 in cash per share, a 4.9 per cent premium to Tuesday’s closing price and a 24.7 per cent premium to the €1.534 price on April 12th, the last business day before Green announced the commencement of a sales process.
"Following a highly competitive process, the cash offer by Henderson Park to acquire the company represents an attractive outcome for shareholders delivering a premium to the share price prior to the announcement of the sale process and to Green Reit's net asset value," said Gary Kennedy, the company's chairman.
The company put itself up for sale in April, bemoaning the fact that the stock traded at a discount to the underlying net value of its properties. That value, it said in a separate update to the Irish stock exchange, was €1.3 billion by the end of June, a 4 per cent increase on the same period in 2018.
Preliminary results showed that Green’s profit after tax tumbled 36 per cent in the year to June 30th to €91.8 million while its portfolio was valued at €1.533 billion.
Nevertheless, Green’s contracted annual rent now stands at €79.4 million, up from €71.7 million in 2018, it said in its update.
Since its public listing in 2013 led by Pat Gunne and Stephen Vernon, Green has amassed a portfolio of prime office, logistics and development assets including the Horizon Logistics Park close to Dublin Airport and One Molesworth Street, which is partly let to Barclays and Canadian investment bank TD Securities.
Mr Vernon and Mr Gunne, whose shares in the company have been valued at about €55.1 million, will step away from the company and an asset management contract as part of a deal. The investment management company they serve will, however, receive between €11 million and €12 million as a performance fee if the deal completes by November. Henderson Park has also requested that investment manager provides services to Green Reit for a six-month period following the acquisition for which it will receive up to €2.13 million, however, neither Mr Vernon nor Mr Gunne will stay on following the completion of the deal.
A group of London hedge funds, including Sand Grove Capital Management and Kite Lake Capital, have helped send Green Reit's stock soaring by as much as 21.5 per cent to €1.86 since it was put on the block.
Sand Grove and Kite Lake have accumulated 7.6 per cent interest in Green Reit by way of financial derivatives called contracts for difference (CFDs). Meanwhile, Irish beef mogul Larry Goodman built up a 5 per cent shareholding in Green Reit.
Henderson Park was set up by former Goldman Sachs and Mount Kellett partner Nicholas Weber three years ago. It entered the Irish market in recent months, teaming up with developer Joe O'Reilly's Chartered Land in May to buy Heuston South Quarter in Dublin from US property group Marathon Asset Management for €222 million.
Commenting on the acquisition, Mr Weber the deal represented a “rare opportunity” to invest in a substantial portfolio through a single transaction. “We believe in the short-term and long-term prospects of the Irish market with its strong macroeconomic backdrop and underlying real estate fundamentals,” he said.
Henderson Park had faced competition from California-based real estate group Kennedy Wilson and a unit of German savings bank DekaBank in the final round of bidding for Green Reit last month, according to sources.
Irish Life had also made it through an initial round in June, but dropped out before the deadline for final offers, they said.
Henderson Park's acquisition is conditional on the approval of Green Reit's shareholders, approval from the High Court and the receipt of other approvals. The company expects the deal to be finalised by November this year.