Sunday 18 March 2018

Trump 'not making sense' as Hibernia Reit focuses on Brexit

Kevin Nowlan, Hibernia Reit
Kevin Nowlan, Hibernia Reit
Ronald Quinlan

Ronald Quinlan

Hibernia Reit ceo Kevin Nowlan has said his company will continue to focus its attention on the impact of Brexit as it is "way too early" to understand the potential consequences of the US presidential election for Ireland.

After Hibernia's half-year results showed the value of its property portfolio surpass €1bn for the first time, Mr Nowlan said, while he and his team had examined a "lot of the policies" proposed by US president elect, Donald Trump, they had concluded that "a lot of it doesn't make any sense" and would not be implemented.

Hibernia's early assessment of Mr Trump's election and its potential consequences for the Irish economy contrasts with the cautionary note issued by Goodbody senior real estate analyst Colm Lauder last Wednesday following the announcement of the US election result.

"While US investors were taking advantage of a strong US dollar position, historically-discounted assets and the dramatic de-leveraging of Irish banks, they also chased yield in what is an open and accessible market," he said. "They now face into a perfect storm domestically and the impact on their appetite, and indeed capacity, for foreign investment is likely to be restrained."

He said demand for commercial space was likely now to be weakened across developed markets including Dublin, as business confidence recedes.

Mr Lauder noted that Ireland has an occupier base, "particularly in the [Dublin] Docklands that is highly skewed towards US multinationals".

"These occupiers rely on the accessibility and openness enjoyed by both [the Irish and US] markets. All this is now at risk given Trump's rhetoric on US businesses abroad," he said.

Notwithstanding the fresh uncertainties presented by the election of Donald Trump as US president, Mr Nowlan said a number of agents had informed Hibernia of a "significant increase" in enquiries in the past six weeks from companies exploring the possibility of relocating from the UK to Dublin in the wake of Brexit.

"There's no guarantee that will turn into demand but it sounds like Dublin is on the agenda for organisations planning moves," said Mr Nowlan.

"The question is will they go ahead? And then will Dublin win, or will it be Frankfurt or Amsterdam or one of the other places being considered?

"That's the thing we're trying to get our heads around at the moment rather than 'The Donald'."

Hibernia Reit would be well- placed to benefit from any relocation of companies from London given that its property portfolio is concentrated primarily in Dublin's central business district (CBD), the area for which demand would invariably be greatest.

In its latest half-year results, Hibernia Reit reported a pre-tax profit of €32.4m, which was down significantly on the €73.7m it posted for the same period last year.

Asked for comment on the company's performance, Mr Nowlan said: "We all know that capital growth is going to slow. It slowed in the last two quarters. Naturally that works its way through to our valuations. The thing is, we're well-positioned because of the projects we have ongoing at Sir John Rogerson's Quay, Two Docklands [Central] and Harcourt Square.

"Upside and outperforming the market is going to come from those value-adds, new lettings and development projects.

"Anyone who looks at our portfolio can see that we're well positioned to hopefully continue growth."

Irish Independent

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