Friday 13 December 2019

Green REIT is closing in on €300m in debt finance

Stephen Vernon of Green REIT
Stephen Vernon of Green REIT

Peter Flanagan

The biggest listed real estate investor in the country is in talks to beef up its warchest to as much as €322m, as it prepares for the "next phase" in the commercial property market here.

Green REIT said yesterday it is in talks with banks in Dublin and London to raise as much as €300m for a mix of acquistions and to finance development and renovations within its current properties.

Negotiations are believed to be at an advanced stage, with confirmation expected on an agreement in the next four to six weeks.

News of the fundraising plans came as Green revealed profits of 43pc in its first year of operation. Importantly, the firm's portfolio reported a strongh investment income yield of 7pc. The firm upped the value of its portfolio by some €36m in the year.

Green is likley to use about €150m of the planned debt funds for acquisitions but Green's Stephen Vernon said the firm did not see huge scope for "big ticket" deals in the future. "We have retained the ability do major deals if we feel they can be justified. You will see us now doing a lot of asset management and we may make the odd sale, again when the time is right," he said.

Green has invested €710m so far and its net asset value of €727.8m equates to about 109c per share.

Its portfolio is largely focused on the Dublin office market. Mr Vernon said he did not expect the company to increase its exposure outside of Dublin in a significant way but added there was "more activity" in the provincial markets than was previously thought.

Prime office rents in Dublin have risen from about €25 per sq ft in 2011 to €45 today, and Green is looking to capitalise on this growth with new developments planned at its Central Park development in Leopardstown in south Dublin.

It is also expected to close on the sale of an office block on Dawson Street in central Dublin which will be knocked down and rebuilt.

The growth in the commercial property market has raised fears of a new bubble, but managing director Pat Gunne played down those concerns.

"The market contracted in Ireland more than anywhere else in Europe so this is a cyclical recovery at this point," he said.

"There has been little to no liquidity in the market and practically zero supply of new stock in the last five years or so, and that is why you are seeing the rental growth we are seeing today," he added.

The results were welcomed by analysts. Shares in the company rose 0.15pc to €1.30.

Irish Independent

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