Stephen Vernon: property in ‘healthiest state that I can ever remember’

Property veteran discusses the sale of Blanchardstown Town Centre and why it is a good time to be moving on

Green Reit’s Stephen Vernon says Brexit would be bad for Britain, the EU and Ireland. Photograph: Eric Luke

Green Reit’s Stephen Vernon says Brexit would be bad for Britain, the EU and Ireland. Photograph: Eric Luke

 

Barring a late hitch, the sale of the Blanchardstown Town Centre will effectively be completed in the next two to three weeks for about €950 million with Green Property and US investor Blackstone swapping contracts.

It will mark a new chapter for the centre, with an annual rent roll of €50 million, while also bringing down the curtain on Stephen Vernon’s 23-year involvement.

Why sell?

“[Co-owner] Jim McKenna is 72 and I’m 66 and he and I have been the two main guys [behind the centre],” he told The Irish Times . “We have worked at it ever since it was a site.

“I think it would probably benefit from a fresh injection of equity and fresh eyes. I don’t have to sell and if it doesn’t sell I would be perfectly relaxed, but there comes a time when maybe it’s right to move it on.”

A large extension to the Yellow Mall is planned and Vernon said this would have involved new equity being invested in the project.

“I’m not going to be putting new equity into Blanchardstown. It already represents far too much of my personal wealth. So it just seemed the logical thing to do.

“But it will be a very sad day for me. I feel very proud of what we’ve achieved. Back to ’93 and the site was covered in stolen cars, caravans and it was derelict land.

“There are now something like 6,000 people in employment related to the centre.”

Vernon was speaking on the fringe of the EY Entrepreneur of the Year chief executives’ retreat to Boston. He has been chosen as a finalist for this year’s industry category.

There is the potential for Blackstone to add up to 1 million square feet of extra space “but I suspect that there will be at least another 600,000 or 700,000 sq feet,” Vernon said.

‘Stupid decision’

“It depends on the economics of it but development will continue here for another generation.”

Is there anything he would have done differently? “The one thing obviously that I regret is that I didn’t buy the land that Cosgraves bought to build Westend retail park [beside the Blanchardstown centre].

“In hindsight, that was a stupid decision, it wasn’t very expensive and we probably could have bought it. Cosgraves bought it and made a huge success of it and in an extreme irony Green Reit [where Vernon is also a director and co-founder] bought it.”

Green Reit was the first real estate investment trust listed in Ireland in mid 2013 and has a market capitalisation of €1 billion. This followed the emergence of Pat Gunne in 2008 as Vernon’s business partner.

“The future in Ireland is the Reit and in the UK is a big question mark,” he said.

“What we’re hoping is that there’ll be a setback in the UK [market], which looks like it might be happening and it might provide an opportunity to start a new business in the UK.”

Mature market

Vernon insists that the sale of Blanchardstown was not a call by him on the commercial market in Ireland.

“No. We’d been selling a lot this year. Project Glas is a sale within the Reit that is designed to control the gearing of the Reit. It has nothing to do with calling the market.”

The Irish market at the moment is in the “healthiest state that I can ever remember”.

“Supply and demand are in balance. The office market has matured to the point where it is no longer opportunistic. Rents are back up in the €50 per sq ft range, there is 3.6 million sq ft under construction in 27 projects.

“Take-up last year was 2.5 million sq ft, this year it is expected to be 2 million sq ft so that looks good. There is another 4 million in potential schemes and things are looking really good.

“The whole model is dependent on demand staying at a robust level.

“There’s demand for certain types of retail, coffee shops and so on. But rents haven’t done much. So retail recovery from a landlord’s perspective is still to come.”

As an Englishman living in Ireland, Vernon has strong views on Brexit. “It would be bad for Britain, bad for the EU and bad for Ireland.

“I can’t understand where the DUP are coming from. They’re in favour of Brexit but if they think that it’s going to be like England and Northern Ireland in a happy little nest for ever more they are kidding themselves. It’s for the birds.

“Having said all of that, I don’t think they will leave. They will bottle it in the end and it will be about money and pensions and jobs.”

If Britain were to vote Leave, should the Republic follow?

“I don’t think Ireland would ever have the desire to part with the EU. It was the best thing that ever happened to Ireland.”

Vernon might now be eligible for a bus pass but “will continue to be active”.

“I have just joined the board of the National Children’s Hospital. And I’m involved in the arts. I sponsored one of the operas last year in Wexford and Green sponsored a Maxin Vengerov concert recently in the National Concert Hall. I love that kind of stuff.

“I bought a [holiday] house in west Cork [Glandoher] because I decided not to go back and live in England again. It has a slipway into the sea.”

In Dublin, he lives beside Fitzwillam Lawn Tennis Club, where he plays tennis and swims.

Sailing, shooting and hill walking are among his other interests, and he has set sail for Spain for a week. “I’ll keep doing lots of different things.”

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