Green Reit sale sparks major surprise

Green Reit shares climbed following its surprise decision to put itself on the market, but other stock market property listed firms failed to get a major lift.

One of the largest property firms in the Dublin office market, the Reit said its share price had long trailed the true net value of its properties and was “convinced” that a sale was the best way of securing value for its shareholders.

The property firm is headed by property veterans Stephen Vernon and Pat Gunne and is predominantly focused on the capital.

It owns major office buildings in Dublin, including One Molesworth Street, George’s Quay and properties on Harcourt St, and a huge logistics facility at Dublin airport, as well as the Cork office complex, One Albert Quay.

The decision has sparked considerable debate about the outlook for the Irish commercial property market.

Some industry experts said the decision to sell-up was a major surprise and appeared to be based on the view that the factors weighing on the property firm’s shares would have persisted.

Despite the growth in jobs which fuels demand for offices and low vacancy rates in the office market, uncertainty over Brexit may be harming the valuations of Irish property firms more than in other markets.

Áine Myler, secretary-general of the Society of Chartered Surveyors in Ireland, said the decision to sell had made the market look up and pay attention.

But she said that the significant size of Green Reit’s property holdings may attract institutional investors who have long struggled to make returns amid low global interest rates.

John McCarthy, head of research with Savills Ireland, said the Dublin commercial market was “in good shape”, with vacancy rates at 20-year lows.

Legislation gives Reit property firms certain tax advantages but many have nonetheless underperformed for some time.

Shares in Irish stockmarket-listed housebuilders have also underperformed.

Green Reit closed almost 7% higher at 164 cent to value the firm at around €1.15bn.

The property firm said in its annual report that its net asset value stood at 180.3 cent a share at its June 2018 year-end, up from 166.9 cent in 2017 and from 153.9 cent a share in the previous year.

Other Reit property firms and house builders gained slightly.

Hibernia Reit shares rose 1.7% to value the firm at over €950m and Irish Residential Properties Reit rose 0.9% to €686m. Philip O’Sullivan, chief economist at Investec Ireland, said there was “no doubt” that Green Reit would secure “ample interest” for its sale.

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