Property investor Hibernia Reit may sell all of the more than 320 apartments it currently owns for almost €150 million to finance the building of new homes on a high-profile site that it is acquiring.
The company is buying 92 acres at Gateway near Newlands Cross in west Dublin from the Irish Rugby Football Union for €27 million. Hibernia already owns 51 acres adjoining the site and the deal will leave it with a 143-acre block of land.
Hibernia owns 326 apartments in Dublin, worth €148 million according to Tuesday’s figures, 293 of them are in Wyckham Point in Dundrum and 16 are in Sandymount, both on the capital’s southside, with the rest in Windmill Lane in the city centre.
Hibernia chief executive Kevin Nowlan said on Tuesday that the company was considering selling the apartments to help fund the construction of homes and offices at Gateway, Newlands Cross.
“It’s something that we have flagged to our shareholders over the past year,” he added.
Mr Nowlan said that Gateway, with good road and rail links to central Dublin, offered an opportunity to build a “quality scheme fast”. He indicated this could be split 70/30 between homes and business premises.
Housing shortage
The Hibernia chief executive has regularly warned the slow pace in tackling the capital’s housing shortage could put mobile investors off the city.
“The biggest risk to Hibernia in my view is the lack of residential development in Dublin,” he said. “From a philosophical point of view, that’s what tweaked our interest in Gateway.”
He argued that the company could not continue to develop offices in the capital – its prime focus – and let them to businesses if there was nowhere for those organisations’ workers to live.
Mr Nowlan suggested that Hibernia could act as master developer of Gateway, putting in the infrastructure and constructing properties that it would rent, while selling some parcels of the land to other builders.
Multinational Hines is taking the same approach to the Cherrywood lands in south Dublin.
As a first step, Hibernia will seek to have the site rezoned. South Dublin County Council currently has the land earmarked for agriculture.
Hibernia director of development, Mark Pollard and David Thomson, its project co-ordinator, have met council officials a number of times in recent months – ahead of the IRFU site purchase – to discuss Gateway's zoning and planning, according to the State's lobbying register.
Hibernia said on Tuesday that the value of its properties rose 3.9 per cent to €1.33 billion in the six months to September 30th, the first half of its financial year.
The listed company, which focuses on developing and leasing offices in Dublin, confirmed that it has let one of its new buildings, 1 Sir John Rogerson’s Quay, to sales and marketing software specialist Hubspot.
Total returns
Hibernia’s profit before tax, which includes the increase property values, fell almost 10 per cent to €64 million from €70.6 million during the same six months last year.
The company completed and let significant parts of its Windmill Lane complex in Dublin last year, boosting its first-half profits.
Net rental income rose 21.5 per cent over the first half to €26.6 million from €21.9 million in the comparable period in 2017.
Hibernia generated total returns on its properties of 5.9 per cent in the first half, ahead of the market, which grew by 4.4 per cent.
During the period Hibernia sold New Century House in Dublin for €65.3 million, modestly ahead of its value in March.
Hibernia declared an interim dividend of 1.5 cent a-share for the period, up 36.4 per cent on the 1.1 cent paid last year.
