Hibernia Reit, the country’s largest stockmarket-listed office landlord, still has “the firepower” to make further significant acquisitions in Dublin, but has all but ruled itself out in pitching for rival Green Reit which had put itself up for sale.
Chief executive Kevin Nowlan was talking after the property firm — which is a major supplier of office space in the Docklands and central Dublin — posted a 15.8% increase in profits to €124m in the year to the end of March, as rental income rose 16.6% to €53.3m.
A large part of the Hibernia rent roll is dominated by US multinational tenants, including software developer HubSpot and Twitter, as well as the Government agencies, such as the Garda for the large Harcourt Street offices and the ESB and regulator ComReg.
The shares rose 1% but are still down 6% in the past year, weighed by concerns of global investors for property and shares around the world.
Although doing much better than the performance of Irish stock market commercial and residential property rivals and the Irish banks, Hibernia’s shares trade at around 20% below its net asset value per share.
At the end of March, its 32 properties were valued at over €1.39bn.
Analysts have ascribed Brexit uncertainty and macro-events outside of Ireland for dissuading global investors in investing in Irish and the wider-European property market, despite a booming economy here.
The unexpected decision last month of listed Irish property firm Green Reit, which owns swathes of office space in Dublin and Cork, to put itself on the market clouded the waters further.
Green Reit had said its shares had long trailed the net value of its properties and it was “convinced” a sale was the best way of securing value for its shareholders.
However, Mr Nowlan at Hibernia said the Dublin office property market was in good shape and the outlook was positive. The company had also said last month it will buy back shares, as part of a plan to return €35m to shareholders.
Hibernia has “a lot of firepower” to make significant acquisitions but it was “very unlikely” to bid for Green Reit because it had “enough on its plate”, with plans for its large developments over the next three or four years.
The projects include its recent acquisition of 144-acre site at Newlands in the Naas Road, and Harcourt Street, from which it currently generates €6m in rent a year, will be among the last to be developed from 2023.
Hibernia plans to more than double its Harcourt Street property to 307,000 sq feet when developed.
Dublin city centre demand outstrips supply by a factor of two, Mr Nowlan said.
And rents in central Dublin were “ticking higher” by 2% to 3% a year but the terms of the leases have extended beyond 12 years, making investments more attractive to European pension funds, he said.
Hibernia was the top performing property fund in Ireland this year and for last three years. Under an expired management performance scheme, Mr Nowlan was paid fees of €2.35m last year.