Tuesday 27 September 2016

Prime office rents now near peak as take-up still 'robust' - Green REIT

Published 13/09/2016 | 02:30

Chairman Stephen Vernon and chief executive Pat Gunne
Chairman Stephen Vernon and chief executive Pat Gunne

Prime office rents in Ireland are "close to peak values" and the potential impact of Brexit is "too early to call", according to property investment firm Green REIT.

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Releasing full-year results, Green REIT said that its net profit fell 7.2pc to €145.5m in the 12 months to the end of June. But its portfolio was valued at €1.24bn at the end of the period. That represented a 17.7pc total return in the period.

The company saw its net rent jump 39pc to €52.6m in the last financial year, while Green REIT also nearly tripled its dividend.

The firm owns a number of high profile buildings around the capital, such as George's Quay and Court, and Central Park. It also owns One Albert Quay in Cork, for which it has paid €41m to date and will pay a further €10.4m by March 2017. Green REIT's tenants include bluechip clients such as Vodafone, Sage, Bank of Ireland, Tyco, Mastercard and Pioneer Investments. Its top five assets account for 79pc of the company's portfolio value, and 81pc of group rent.

Interest rates remain supportive of real estate as an asset class, and take-up of office space in Ireland has been "very robust", added Green REIT, and is driven by local and international occupiers.

It pointed out that Nama remains constrained in its development of assets under its control, and that although overall supply of speculative office space has continued to increase, robust take-up levels have meant the market is operating at "relative equilibrium".

The investment management firm behind Green REIT was founded by Stephen Vernon and Pat Gunne.

During the period, Green REIT completed the acquisition of full control of Central Park in south Dublin.

It also sold four properties in the second half of the financial year for a total of €74.7m. They had been acquired for a combined price of €42.6m.

Green REIT is currently developing a €30m landmark office block on Molesworth Street in Dublin. One Molesworth Street is being built on a site that was acquired by Green REIT for about €23m.

The company is developing an additional premises at 32 Molesworth Street.

Terms have already been agreed to let 100pc of that property to a single client.

It's developing three other properties in Dublin, including a premises on Harcourt Road, an additional block at Central Park, and has completed a development at the Horizon Logistics Park near the airport.

The total cost of those five developments, including acquisition expenses, is reckoned by Green REIT to be around €176m. It said it expects to make a €68m total profit from the projects.

Irish Independent

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