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Green REIT, the recently listed property investment company, has announced €178 million worth of acquisitions including the EBS headquarters, Independent Newspapers’ print works in Dublin and a sizeable portfolio from Danske Bank. Ireland’s first “real estate investment trust” made the deals public in its interim management statement yesterday.
It is a significant level of activity for the Dublin-based company, which floated on both the Irish and London stock exchanges last July, raising €310 million in cash. The variety of purchases will be seen as an attempt to take advantage of the commercial property market, which has begun to see growth for the first time since the onset of economic difficulties six years ago.
In particular, though, the disclosure that it will end up owning the ground lease at the Independent’s printing operation will come as a surprise to the investment market as Davy was about to be named as top bidder for it at €4.3 million, some €500,000 below the original asking price. However, Davy, which acts for a range of investment syndicates, is understood to have flipped on the investment at a profit to Green REIT.
Independent News & Media spent a reported €50 million on the development of its printing works in 2002 after leasing the high-profile site of 4.39 acres from the Citywest developers, Davy Hickey Properties.
John Moran of Jones Lang LaSalle handled the sale of the lease, which is believed to have attracted only three bidders. The 200-year lease from August 2009, includes an option to assign it to the landlord in 2024 and each 10th subsequent year. The Independent group is currently paying an annual ground rent of €402,532 on an upwards-only basis linked to office rents in the adjoining campus.
Not surprisingly, the company was not among the bidders for the ground lease as the sale came only months after the firm persuaded a consortium of eight banks, including the State-owned AIB, to write off debts of €138 million in exchange for an equity stake in the group.
The deal is expected to reduce the group’s debts to €118 million by year end.
In a note on Green REIT yesterday, Davy stockbrokers said the company was now over 55 per cent invested and “is off to a good start” in building a strong portfolio. Its share price has climbed 20 per cent since its IPO last July. Although rising by just 1 per cent in Dublin yesterday, the value of the anticipated investment had been reflected in previous trading.
Green REIT’s cash acquisition of the Danske Bank portfolio represents the lion’s share of yesterday’s announcement, valued at €127.6 million and with an initial yield in excess of 8.5 per cent.
The sale of the portfolio, which was previously reported in The Irish Times, encompasses a bundle made up of 10 properties, eight in Dublin, totalling more than 708,000sq ft, 84 per cent of which is let, generating an income of €10.6 million. The commercial tenants included are Bank of Ireland, Homebase, Lidl, TK Maxx and Woodies, among others. Also in the portfolio is a 112-acre development site adjacent to Dublin Airport.
The EBS building society headquarters on Burlington Road, valued at €46.5 million, is also a highlight, particularly given its prime Dublin 4 address. It has been acquired in an off- market transaction with an initial yield of 8.6 per cent and has 81,200sq ft of modern office space. It is currently let to the EBS with three years remaining on the lease.
Green REIT non-executive director Stephen Vernon said: "The acquisition of these grade A buildings in Dublin brings our total invested capital to €178 million and demonstrates our ability to source high quality investments both on and off-market. Our acquired portfolio is consistent with our stated strategy and we look forward to investing further in the Irish commercial property market and delivering attractive returns for our shareholders."
