Saturday 3 December 2016

George Soros cuts stake in Hibernia REIT

The 'man who broke the Bank of England' cools on Irish commercial property

Published 27/09/2015 | 02:30

George Soros is cutting back
George Soros is cutting back

Billionaire investor George Soros has reduced his exposure to the Irish commercial property market just as experts warn about a severe shortage of office space in the capital.

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Hungarian-born Soros is considered one of the world's shrewdest investors. He made a killing betting against sterling before the Black Wednesday crash, earning him the title of 'The man who broke the Bank of England'. Forbes Magazine put his wealth at $24.5bn (€21.9bn) as of Friday.

Filings last week show that Quantum Strategic Partners, a vehicle managed for Soros' benefit, sold off over five million shares in Irish property investor Hibernia REIT on Friday, September 18.

Based on Soros' initial investment of €30m at €1 a share in the company's IPO, that would have delivered him a profit of around €1.5m.

He later added a further 22 million shares to maintain his stake around 8pc. Now, his stake is just under 7pc.

Soros Fund Management, the company chaired by Soros which manages Quantum on Soros' behalf, declined to reveal the reason for the sale, saying it does not comment on its transactions.

The move to take profit came days before a report by the ESRI and commercial-property giants Jones Lang Lasalle (JLL) said that a lack of construction during the economic crisis concern could act as a constraint to new foreign direct investment (FDI) and to the expansion of existing FDI. It also coincided with Hibernia's entry to a FTSE real-estate index, which the company hoped would attract new investors.

Hibernia is currently building a number of new developments, including one at the site of the old Windmill Lane studio in Dublin's docklands.

It declined to comment.

"As it currently stands, if there was a repeat of any company wanting to set up or relocate to a facility in Dublin for more than 500 people, they would now have to wait until the first quarter of 2017 to occupy a suitable building.

"In contrast, in 2013, there would have been seven suitable buildings to choose from," the ESRI/JLL report said.

"The market needs an increase in speculative development to meet the strong demand," the report's authors, David Duffy and Hannah Dwyer, added.

The day of Soros' transaction saw 61 million Hibernia shares traded - by far the highest volume since the company's IPO in December 2013 - according to Bloomberg data.

Specialist property investors begin to invest in REITs as they gather more assets, according to an industry source.

REITs in their infancy were seen as "cash boxes" being used to acquire assets - different to a traditional Irish property play.

REITS were only introduced in this country two years ago - after a legislative change - but have been commonplace in other countries.

ISE documents show that the New York-based Marketfield Asset Management sold off around three million shares on the same day as Soros, taking its stake below 4pc.

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