Thursday 17 January 2019

Davy property fund reports 6.6pc return

Property

The €289m Davy Irish Property Fund has a weighted average unexpired lease term of around 7.3 years. (stock picture)
The €289m Davy Irish Property Fund has a weighted average unexpired lease term of around 7.3 years. (stock picture)

Michael Cogley

The Davy Irish Property Fund (DIPF) reported a 6.6pc return on investments in the first nine months of last year, according to the manager's most recent quarterly update.

In the three months to the end of September, Davy completed a 10-year lease extension to the fund's largest office asset, 20 on Hatch in Dublin's city centre. The fund also finalised deals for two further units at the Nutgrove Shopping Centre in Rathfarnam, in south Dublin, for a combined price of €1.42m. It also recorded a 1.7pc return in the months between July and September.

Bookseller has also begun trading in the fund's refurbished 83-85 Patrick Street, also in Dublin city centre. The project required three smaller units being repositioned into one larger unit to create a more appealing retail offer.

The €289m fund also has a weighted average unexpired lease term of around 7.3 years.

Davy Real Estate investor relations chief Simon MacKinnon said: "We continue to actively engage tenants across our entire office, retail, and industrial portfolio, resulting in successfully contracting over 100,000 sq ft of space over the last six months.

"Securing this rental income ahead of forecasts, significantly strengthens out target 5pc income distribution yield."

So far, the fund has provided a total shareholder return of 24.28pc per annum over five years. It is managed by Davy Real Estate, which has around €1.4bn in real estate assets under management.

It is expected that future returns from the fund will lean more so towards income from its assets rather than capital gains.

DIPF is expecting income distribution to grow from 4.5pc of net asset value to around 6pc. The fund manager expects this through a mix of renewing leases at prevailing market rates and by introducing a proportion of debt into the fund.

In its quarterly update, Davy also outlined a desire from McDonald's to extend its current lease on Winthrop Street in Co Cork to beyond March 2020.

DIPF said that it was "very hands on" with tenants in terms of trying to extend leases and maximise potential rents from any of its developments or sites.

Sunday Indo Business

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