Shareholders profit from Hibernia prophets

REIT sold Dublin property for €35.5m after buying it last year for €28m

Shareholders will presumably be happy that Hibernia Real Estate Investment Trust (REIT) plans returning to them the €35 million it made from selling a Dublin office block, beginning with a €25 million share buyback.

Hibernia sold 77 Sir John Rogerson’s Quay on the south side of the Liffey for €35.5 million after buying it in February last year for €28 million, a decent return for little more than a year.

Shares in the company were trading at about 20 per cent of its net asset value earlier yesterday, although they gained some ground following news of the deal. In essence, this means that Hibernia’s shares are cheaper than the assets it owns.

Analysts such as Philip O'Sullivan in Investec Ireland believe that the discount in the price Hibernia's shares relative to the value of the properties it owns is unwarranted, especially in light of the buoyancy in the Dublin office market, on which the REIT is mainly focused.


Another way of looking Hibernia’s move is that the company thinks this is a good time for investors to share in some of that buoyancy, as it may not be able to repeat the quick return it made on the Sir John Rogerson’s Quay property.

There are plenty of risks to the market’s buoyancy out there. Brexit, which has helped increase demand for space in Dublin, has a downside for all of Ireland, and the Republic’s biggest city will not be immune to this.

Fears of a slowdown in the EU and US abated somewhat yesterday, but any drag on key trading partners’ economies will mean less mobile investment and fewer people buying our exports. Then there are the internal pressures, such as the ongoing housing shortage, which could also derail mobile investment.

Given the threats lurking out there, Hibernia’s move could shortly end up looking very prudent, if not downright prescient.