Real estate investment trust Green Reit stands earn a profit of more than €60million on the sale of a group of properties that it put on the market earlier this year.
Green said on Monday that its €1 billion property portfolio has benefited from ongoing economic growth in the Irish economy and it expects its investment strategy to continue to deliver.
In the six months to December 2015, pre-tax profit stood at €67 million, net assets rose by 7 per cent pushing close to the €1 billion mark at €961.5 million, or 140.7 cent. It was up by 19 per cent in the prior 12 months.
The trust announced earlier this month that it plans to sell properties in Dublin, Limerick and Naas, which had a combined value of almost €169 million on December 31st.
Chief executive Pat Gunne said that this represented a 62 per cent profit on the €104 million that it paid for the properties, originally acquired from Danske Bank, after the trust was established three years ago.
The package, knowns as the Glas Collection, includes the Arena Centre, Ormond Building, Classon House and Parnell Car Park in Dublin, the Parkway retail park in Limerick and the Globe retail centre in Naas.
Green Reit is selling the properties to ensure that its gearing – the ratio of its debt to its assets – remains within the 25 per cent target that its management set last year. Executive chairman, Stephen Vernon, said this is in line with the "better quality" Reits operating in the UK.
“The fact is that we are a Reit, we are not a pure developer as such,” he said. “That means that we are about dividends, rental income and paying those through to our shareholders, so we felt that 25 per cent was the most appropriate level of gearing for a Reit.”
Its €104.7 million debt at the end of December meant its gearing stood at 9.6 per cent of its €1.02 billion assets. However, the purchases of Central Park and Albert Quay increased that liability to €284 million, or 22 per cent of its €1.28 billion assets.
The property company has now drawn down €134 million from its Barclays facility of €150 million, but it has flexibility to increase this limit.
Mr Gunne said the Irish commercial property market continues to be supported by the growth in the Irish economy and foreign investment which has “remained very resilient”.
“Our focus in Green Reit continues to be on the active management of our € 1 billion investment portfolio, where we have 99 per cent occupancy, and the development of our five projects in Dublin, where we expect to add to our very strong list of existing tenants.”
Of its development programme, Green Reit said it is now on site at four locations in Dublin – One Molesworth Street, 32 Molesworth Street, Horizon Logistics Park and Block H in Central Park – and expects to commence on site at 4-5 Harcourt Road in mid-2016.
Green Reit said it completed lease renegotiations on €14.7 million, or 23 per cent of total annual contracted rent, including leases with Pioneer Investments (€3.4 million annual rent) andVodafone Ireland (€7.3 million annual rent), the latter of which is expected to complete later this month.
It also secured some €5.8 million in new annual rent, secured through new lettings, the largest of which is to FidelityInternational in George’s Quay at a rate of €3.5 million a year. Its vacancy rate stood at 1 per cent as of end-December.
Its total unexpired leases have increased from five years to 7.3 years, which has improved its overall risk profile, according to Mr Gunne.
Looking ahead, Green Reit said that its “investment strategy is clear and continues to deliver”.
“The board is confident that the continued implementation of our asset management and development strategy, against the favourable backdrop of a strong commercial property market and supportive Irish macroeconomic fundamentals, will deliver further shareholder returns in line with our target”.
