Friday 17 November 2017

Ireland may need specialist pharma hubs for exporters if Brexit severs logistics networks through UK

Ireland is a base for nine of the 10 biggest pharma firms. Stock image
Ireland is a base for nine of the 10 biggest pharma firms. Stock image
John Mulligan

John Mulligan

Ireland could need massive specialist pharmaceutical storage facilities for exporters if Brexit severs logistics networks through the UK.

The ceo of listed Irish property group Green REIT, Pat Gunne, said pharma companies based in Ireland that currently ship finished products to mainland Europe through the UK may be forced to ship directly from Ireland once the UK leaves the trading bloc.

He pointed out that the bulk of the pharma sector production here is earmarked for export.

Ireland is a base for nine of the 10 biggest pharma firms.

"At the moment, we are exporting temporarily to the UK, where they've got more storage capacity, for onward delivery within the European network," he said.

"So, there is an argument that if the pharma sector in itself is not able to hold their goods temporarily in the UK, they may have to develop some logistics and storage capacity within Ireland, and then bring that directly as a distribution solution for the rest of Europe."

Mr Gunne said one of the group's corporate tenants had highlighted the possible impact, but stressed that it's still "early days", given that Brexit has not been triggered yet. He also told investors that Green REIT is "having discussions with corporates" regarding possible Brexit moves to Ireland.

"Nobody wants to be out there in the media making any comments," he said.

"The level of traction has grown much quicker than we would have anticipated."

Green REIT, whose directors also include Stephen Vernon, released interim results yesterday that showed its contracted annual rent on 21 properties rose 6.2pc to €65.1m in the six months to the end of December.

Its profit for the period was €43.7m, including revaluation surpluses.

That compared to €67.1m in the first half of the previous financial year.

The value of its portfolio - which is almost exclusively centred on Dublin - climbed from €1.03bn at the end of December 2015 to €1.31bn at the end of December 2016.

The company paid €219m for assets in the past 12 months, and disposed of €87m worth. Those assets that were sold were primarily secondary properties.

Green REIT signed up Maple Funds Services as the tenant for the entirety its newly-built office at 32 Molesworth Street in Dublin in December, for an annual rent of €1.67m.

Green REIT is also building three other new offices in the capital.

In recent months it bought 164 acres at the Horizon Logistics Park beside Dublin Airport for €12.2m.

Green REIT owns the park and the land purchase brings the total development site around Horizon to 264 acres.

It could develop an additional 2.5 million sq ft of space at the site. Existing tenants include DHL, and Swiss logistics giant Kuehne & Nagel.

"It's pretty unique to get 264 acres of development land in between an airport and a main motorway, with immediate access to the port tunnel," Mr Gunne told the Irish Independent.

"There is a move towards logistics and it is the big beneficiary of the disruption coming through in the retail sector as a result of ecommerce.

"We do now have the opportunity to create Ireland's leading logistics hub."

Irish Independent

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