Property trusts show signs of a rise after Brexit losses
Share prices of Irish Real Estate Investment Trusts (REITs) have shown a gradual recovery of post-Brexit losses during the past three months and this could help encourage some private property investment funds to float their shares on the stock markets before the end of this year.
Since their November lows, Green REIT's share price has risen 15pc and Hibernia REIT's by 13pc. Ires REIT has also risen by 15pc since its 2016 June low, despite the uncertainty and caps on the residential rental sector.
Goodbody stockbrokers are forecasting that Green REIT's half-year's results next Tuesday will show an increase in EPRA net asset value of 8.5 cents per share to 163.8 cents. Last Friday the shares traded in a 138 to 141 cents range.
"Maturing income stream and non-core disposals from the Green portfolio allowed an above peer dividend pay-out in FY2016 of 4.6c per share. We expect this distribution level to continue with a dividend of at least 4.5c per share in the full year of 2017," says Goodbody's Colm Lauder.
As well as the strong performance of Dublin's commercial property market, Lauder also points to Green's two new developments which will boost NAV this year. Its 32 Molesworth Street development could add 2c while Block H at Central Park could add a further 1.5-2c.
He expects its One Molesworth Street development to attract considerable tenant interest.
"A large office pre-letting would be a great gauge of market confidence post-Brexit and post-Trump. Equally, progress on the retail unit, with a potential rent roll of €0.8m pa, is eagerly awaited," he adds.
Meanwhile, Kevin Nowlan, chief executive officer of Hibernia REIT, said earlier this month in a trading update that Hibernia's portfolio "has performed well in the period thanks to our asset management activity, with new leases signed at Harcourt Square and Two Dockland Central, the formation of a flexible workspace partnership with Iconic and planning permissions received on two potential developments".
In addition, IRES REIT's CEO David Ehrlich, said last week that the firm is adding about 600 apartments including 68 apartments under construction at Block B2B at Beacon South Quarter
Its EPRA NAV increased from 104.3 to 112.5 during 2016 while its share price on Friday was 122c.
Irish investors may see more opportunities to invest in REITs this year following the recent changes to the tax treatment of property investor funds.
The Government expects that some of these will opt for the tax-efficient regime of REITs rather than Irish Real Estate Funds (IREF) as a 20 pc withholding tax will apply to certain IREF pay-outs.