Green REIT is continuing its investment drive, today exchanging contracts to buy €375m (£302m) of Dublin assets from Cosgrave Property Group.
The purchase price for the 650,000 sq ft office and retail portfolio reflects a net initial yield of 6%.
Steven Vernon’s and Pat Gunne’s Green REIT will fund the purchase using the company’s cash, with bank debt raised against the assets “in due course”.
Following the purchase Green REIT said it will have invested 94% of the €685m of equity raised since its IPO in July last year.
The portfolio comprises office buildings at Georges Quay and George’s Court, Dublin 2 and retail and other commercial space in Westend Retail Park, Blanchardstown, Dublin 15.
It includes 347,000 sq ft of Dublin 2 grade-A offices, 202,000 sq ft of retail space in Blanchardstown and 101,000 sq ft of office and commercial space in Blanchardstown
The assets generate a passing rent of €23.7m pa on expiry of rent free periods from 58 tenants with a weighted average unexpired lease term of 4.8 years.
Main office tenants include Pioneer Investments, Invesco, Northern Trust, GAM Fund Management and RBC Dexia and Next, Nike, Gap, Heatons, New Look, Lidl and Argos in the shops.
Ireland’s first REIT said the acquisition when completed “will be in line with the company’s stated objective to assemble a portfolio of prime and good quality secondary properties with a Dublin focus”.
Following this transaction the total capital invested by the company, which listed on the London Stock Exchange less than 12 months ago, will be €719.4m, split between €644.8m of shareholder equity and €74.6m of borrowings.
This leaves the company with uninvested equity of €40.2m.
Green REIT’s total gearing level following this transaction will be 10.9%, leaving it with gearing headroom of €191.3m, based on a target total gearing level of 35%.
The cash inflow from debt raised against the portfolio being acquired, post-closing, will therefore facilitate further acquisitions by the company in the future.
Following this transaction Green REIT’s passing rent will be €50m pa from 19 properties, 96% of which by value are in Dublin, with an initial yield of 7% and a total occupancy rate of 92%.
Cosgrave Property Group confirmed that: “The disposal represents the culmination of a strategy to deleverage the business and to concentrate on their extensive development portfolio.”
Vernon, chairman of Green Property REIT Ventures, said: “The acquisition of this substantial portfolio of high quality properties represents significant progress towards our stated objective to assemble a portfolio of commercial property assets which delivers targeted shareholder returns. Our total invested capital will exceed €719m when this acquisition completes. Having launched as recently as July 2013 this efficient deployment of over 94% of the company’s capital on quality commercial real estate has exceeded the directors’ expectations and puts the company in a strong position to capitalise on further growth in commercial property values in Ireland.”
Gunne, chief executive at Green Property REIT Ventures, added: “We are delighted to execute a transaction of this scale and quality at this point in the Irish real estate recovery cycle. It also demonstrates the strength of our team and enhances our reputation as low risk counterparties within the Irish property industry. We look forward to actively managing this substantial portfolio of exceptional assets and to continuing the excellent relationships developed with the tenants by the Cosgrave team.”
bridget.o’connell@estatesgazette.com
