UK property company Henderson Park is on track to agree to acquire Green Reit this week, hastening the stock-market exit of the first real-estate trust to float in Dublin post the property crash in late 2008.
The market value of Green Reit has raced up to as high as €1.3 billion since the offices and warehouse group, with an annual rent roll of €73 million, put itself up for sale four months ago after concluding that stock market investors had consistently undervalued the business.
It is understood that founding directors Stephen Vernon and Pat Gunne, who own shares that have been valued at as much as €53.5 million by recent trading, will step away from the company and an asset management contract as part of a deal. They may receive additional payments, or what are known as golden handshakes, from Henderson Park, according to industry sources.
A spokesman for Green Reit and a spokeswoman for Henderson Park both declined to comment.
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. They have been betting that the takeover deal would be priced at a premium to the company's net asset value (NAV) of €1.83 per share as of the end of December.
Contracts for difference
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’s aggressive build-up of a 5 per cent shareholding in Green Reit in recent months has also prompted speculation that he is playing a similar takeover arbitrage game.
Green Reit became the first real-estate investment trust to float on the Irish stock market in 2013, before going on to amass a €1.48 billion portfolio of prime office, logistics and development assets.
The portfolio includes Horizon Logistics Park, close to Dublin Airport and the M50 motorway, One Molesworth Street, which is partly let to British bank Barclays and Canadian investment bank TD Securities, and the Central Park office complex in Sandyford, south Dublin.
Green Reit said at the end of last month that a committee of the board had decided to enter exclusive talks on a potential sale of the business to Henderson Park.
The committee excludes Mr Vernon and Mr Gunne, who own almost 28.8 million shares in the company through direct and indirect holdings. The two men also control Green Property Reit Ventures, the investment manager of Green Reit's assets, which has a contract that runs until July 2021. The investment manager's annual rate is 1 per cent of NAV.
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.
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.