A new company is taking advantage of Ireland’s recovering property market by announcing plans for a €350m initial public offering.
Hibernia will become only the country’s third Real Estate Investment Trust (REIT) but has already attracted cornerstone investors for €124.5m of its €350m capitalisation target after kicking off the pre-marketing process in September. The company hopes to float the REIT on the London and Irish exchanges just before Christmas.
In a late November statement the company said it would seek to generate before-tax returns of ten to 15 per cent for shareholders each year when fully invested. Ireland’s commercial property market is currently generating annual income returns of 9.7 per cent, the highest in the world, according to Investment Property (IPD).
Irish property prices buckled in the recession, falling 65 per cent from a 2007 peak. However, the lure of the country’s low corporate tax rate is encouraging US companies — including Yahoo!, Amazon and Facebook — to settle on Dublin for their European headquarters, triggering a rush for prime office space.
“Dublin is a highly attractive place to do business and with the Irish economy improving, demand for commercial space is set to rise,” said Kevin Nowlan of Hibernia’s management team.
Hibernia will focus on the office sector, but will consider other assets, such as retail, warehousing and industrial property, that are within the company’s investment policy.
Nowlan believes a significant amount of Irish property assets will become available with the post-crisis deleveraging of banks and other institutions.
“By that time, the directors expect to have built a high quality income-producing portfolio and intend to continue to grow the business as an income-focused, active asset management property company,” he added.
REITs are globally recognised publicly listed companies that invest in property assets. They are low risk, liquid investment companies whose shares can be bought and sold in the same way as shares in any other company.
