Friday 23 February 2018

Kennedy Wilson sees 14pc rise in Dublin office rents

William J McMorrow of Kennedy Wilson
William J McMorrow of Kennedy Wilson
John Mulligan

John Mulligan

US property-investment firm Kennedy Wilson has extolled the asset portfolio owned by its sister firm, Kennedy Wilson Europe (KWE), as the pair try to quell shareholder dissent over their planned merger. The entire deal will involve well over €1bn worth of Irish offices, hotels and apartments.

Kennedy Wilson announced in April that it's planning to buy KWE in an all-stock deal that values the European unit at £1.5bn (€1.7bn). That was a 20pc premium to KWE's closing price the final trading day before the deal was announced.

But some investors are unhappy. Quantum Partners, a George Soros investment vehicle, has said it's disappointed at those terms, which would create a $4bn (€3.7bn) global property investment giant. In an investor presentation just published by Kennedy Wilson, it notes that Ireland may be a short-term beneficiary from Brexit. Yesterday, Kennedy Wilson announced that an in-development office block in Dublin that's part of the Capital Docks scheme has just been sold to banking giant JP Morgan.

The Capital Docks project is being built by Kennedy Wilson, Nama and Fairfax Financial Holdings.

The US investment firm also owns the Shelbourne Hotel in Dublin, while KWE owns the Stillorgan Shopping Centre and the Portmarnock Hotel and Golf Links among other assets here.

Kennedy Wilson, headed by chief executive William McMorrow, also told investors that Ireland continues to be the fastest-growing economy in the eurozone. It pointed out that the combined group will be a leading property company in Ireland, with a "strong reputation in apartments".

It added that the pair's significant development portfolio "provides additional upside". Kennedy Wilson also said that it will use asset-management lessons learned from its US portfolio to "drive value" in Irish and UK apartment portfolios.

Kennedy Wilson also pointed out that there has been a 14pc year-on-year increase in Dublin office rents, and a 7pc year-on-year increase in apartment rents in the capital. It added that the long-term fundamentals of the Irish market "remain attractive".

Kennedy Wilson said the combined group would continue to focus on the markets where management sees long-term potential - the western United States, Ireland and the UK. Of KWEs assets, about 26p are in Ireland, based on the carrying equity value of its entire property portfolio. Just under 60pc are in the UK, and the remainder split between Spain and Italy.

Irish Independent

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