Suggestion pandemic spells end of office is ‘jumping the gun’

Yew Grove Reit chief financial officer says he hopes vaccination programme ‘speeds up’

Yew Grove completed its acquisition of the Millennium Park in Naas last year. Photograph: Alan Betson / The Irish Times

Yew Grove completed its acquisition of the Millennium Park in Naas last year. Photograph: Alan Betson / The Irish Times

 

Suggestions that the Covid-19 pandemic will spell the end of office working are “jumping the gun a bit”, according to Yew Grove Reit chief financial officer Charles Peach.

Mr Peach was speaking after the Dublin-listed owner of office and industrial assets outside the capital’s city centre published full-year results for 2020 which showed it grew its rent roll by 22 per cent despite the impact of the pandemic.

The property investor, whose focus is on office and industrial assets let to State entities, IDA-supported companies and large corporates, cut vacancies, increased profitability and considered funding options to boost further growth.

“We do not believe, by any means, that this is the end of the office,” Mr Peach told The Irish Times.

Stability

“As we get some stability – because I don’t believe we really have stability yet in terms of where we are in this pandemic – then I think we’ll get a better idea of where and how people would like to work. But I think assumptions before then might be jumping the gun a bit.”

Mr Peach said the indicators from Yew Grove’s clients over the past year suggested businesses are still considering their options.

“Our portfolio is majority office,” he said. “On that side, we continued, even in the pandemic, to make new lettings. So we’ve still got demand from tenants.

“If we look over where we have been in respect of rent reviews and similar, it is not as if everyone has suddenly decided they don’t want to have offices anymore.

“We have seen rent reviews and a number of breaks being ignored by tenants who are obviously therefore making an active decision that they wish to stay in that building.

“I think office occupiers themselves are still working out what they want to do and where they would go. We’re all only a short way through the vaccination steps and I think it is still up in the air where that will lead to.

“So I don’t think there’s a decision that everyone’s going to leave offices. I think a lot of people are waiting to see what happens.”

Programme

Mr Peach also said that while it was not within his remit to comment on the State’s performance in dealing with the pandemic and the rollout of the vaccine, he hoped it “speeds up”.

“If I were to look at those countries that are further ahead with their vaccination programme – there are only a relatively low number of those – I think with those it is too early to say what exactly the impact will be or has been.

“I hope that the Irish vaccination process continues. I hope it speeds up. But I don’t think it’s something on which I can talk particularly knowledgeably.”

Yew Grove’s results showed it had an annualised rent roll of €10.9 million as of end-December 2020, up from €8.9 million in 2019. It said annual rents increased to €11.3 million as of January 1st, 2021.

Net revenues were €10.6 million, including €150,000 of lease surrender premium payments. Net vacancy was 6.9 per cent as the company noted that due to the pandemic, vacant properties remained unoccupied for longer than expected. It reported a pre-tax profit of €7 million, up from €5 million in 2019.

Yew Grove said the increase in rent reflects the completion of the acquisition at Millennium Park in Naas, and “effective asset management in letting vacancy and capturing reversion through rent reviews and lease re-gears”.

It had to shelve its fundraising plans for 2020 due to the impact of the pandemic. It had originally aimed to raise almost €100 million during the year. However it is currently considering a range of funding options, including raising equity.