Green Reit close to letting top floor of central Dublin office

Green Real Estate Investment Trust (Reit) is close to letting the top floor of its recently completed flagship office building in central Dublin.

The company said on Tuesday that the value of its properties rose 5 per cent to €1.45 billion in the six months to December 31st, the first half of its financial year. Profit for the period increased 21.4 per cent to €53.1 million from €43.7 million during the equivalent six months in 2016.

The investment trust’s shares surged almost 2.5 per cent to €1.572 on Tuesday morning on the back of the news.

Speaking after the results' release, Pat Gunne, chief executive of Green Property Reit Ventures, said the company was in the final stages of talks with a prospective tenant for the top floor of One Molesworth Street in Dublin.

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Green has already recruited British bank Barclays and aircraft lessor Goshawk Aviation as tenants for the building, which is just metres from St Stephen's Green in the capital's centre.

Mr Gunne did not name the business that is likely to become Molesworth Street’s latest tenant as talks are at a critical stage. “We are negotiating the lease,” he said.

Further assets

Green is focusing on developing its existing properties rather than buying further assets, according to Mr Dunne. The company has 37,200sq m of offices to build in a large complex in Sandyford in Dublin's southern suburbs and 262 acres at its Horizon Logistics Park close to the city's airport.

Mr Gunne predicted the €91 million that Green intends spending on these developments would bring its debt to around 25 per cent of its properties’ value.

Green has already said that it does not want its loan-to-value ratio to exceed this limit.

It has begun work on the newest building in Central Park in Sandyford. Last year it let a unit in the Horizon park to high-end jeweller Bulgari.

Green said it would pay shareholders an interim dividend of 2.6 cent per share. This comes to 80 per cent of its 3.2 earnings per share for the period.

Income from rent grew almost 20 per cent to €34 million in the six-month period. Green’s contracted rent now stands at €75 million a-year.

Mr Gunne noted that rent contributed more than half its profit for the period. He pointed out that growth in the value of its properties contributed a greater share of profit growth in the past few years.

Investment properties’s value grew to €1.405 billion from €1.3 billion, while developments in progress accounted for the balance.

Stamp duty

Green said that Minister for Finance Paschal Donohoe’s decision to treble stamp duty on commercial property deals to 6 per cent in November knocked €59 million of the value of its properties.

“Whether the higher rate of stamp duty adversely impacts on Irish real estate transaction volumes and pricing remains to be seen as we move further into 2018,” the company said.

Mr Gunne noted that profit from projects such as One Molesworth Street offset the impact of the rise in stamp duty.

The highlight of the period was completing One Molesworth Street and striking deals with the office block’s first tenants, which also include a restaurant and bakery.

Chairman Gary Kennedy said Green's focus continued to be on driving returns for shareholders.

"We continue to operate against a backdrop of sustained economic growth in Ireland and a robust occupier market in our key sectors, Dublin offices and logistics."

Mr Gunne noted that a strong economy and a high level of foreign direct investment supported Green’s business.