Sunday 8 December 2019

Tax hike 'won't make Green Reit build houses'

Green Reit director Stephen Vernon and CEO Pat Gunne
Green Reit director Stephen Vernon and CEO Pat Gunne

Ronald Quinlan Commercial Property Editor

Green Reit CEO Pat Gunne has dismissed Paschal Donohoe's argument that the increase in stamp duty on commercial property transactions introduced in the Budget will push developers to switch from building offices to housing.

Speaking to the Irish Independent following the publication of Green Reit's latest interim results yesterday, Mr Gunne described the Finance Minister's analysis of the situation as "far too simplistic".

Pointing to Green Reit's own case as an example, he said: "It's not as simple as that. We are commercial developers. We're first and foremost an investment company. We've got €1.5bn in assets. We've got a conservative rent roll of €75m and heading for €87m on an annualised basis. We're developing about €400m in aggregate [in assets], and we've derisked about two-thirds of that, but that's all commercial development.

"We don't have the expertise on the residential side, so even if we wanted to, we wouldn't be able to just 'flip flop' over into the residential side. It's far too simplistic an analysis."

Green Reit's two-pronged strategy of delivering and leasing office in Dublin's central business district and logistics space in or near the capital is certainly proving to be lucrative. This was borne out yesterday with the company reporting a profit of €53m for the six months to December 31 last, an increase of 21pc on the same period in 2016. Green Reit noted that without the increase in stamp duty from 2pc to 6pc introduced in the Budget, its profit for the six months would have amounted to €112m.

The value of the company's property portfolio meanwhile recorded a 5pc increase to €1.45bn in the same period. On a like-for-like basis, the value of portfolio increased by 2pc.

During the period, the company, which last year signed an agreement with, among others, Barclays Bank to lease 3,437 sq m at its One Molesworth Street development, saw its rental income increase by just under a fifth to €33.7m.

"Our strategic focus continues to be on driving risk adjusted returns for shareholders, through our development schemes and a progressive dividend policy which is underpinned by a high-quality portfolio and managed by a highly skilled and experienced team," said Green Reit chairman Gary Kennedy.

He added that the company continued to operate against a backdrop of "sustained economic growth in Ireland", and a robust occupier market in its key sectors, Dublin offices and logistics.

Irish Independent

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