Commercial real estate investment trust, Green REIT, has reported a 9% increase in net asset value to €1.66 per share in its full year results to the end of June. That represents a near 13% return in the period. The group's portfolio valuation increased by 11% to €1.38 billion. However, profit after tax was down 11% to just below €130m.
Pat Gunne, chief executive of Green REIT, said asset values were up to €1.4 billion, which was a good achievement given that the REIT has only been in operation for four years now. "That's up 11% year on year. One of the key components is rental income and dividend flows. Operating profits from the retail side are up 33% year on year."
Mr Gunne pointed out that the rate of growth on rental income had slowed in recent times as a result of a dramatic increase on the supply side. "It's been a volatile market since we started in 2013. Rents were €30 per square foot. Now it's closer to €60 per square foot. All of the constraints that we hear about on the residential side is not applicable to the commercial sector where we're developing more than any other city relative to the amount of office space that we have in the city," he said.
Mr Gunne said he believed an equilibrium was developing between supply and demand which was good for the landlord and the tenant. "We're developing enough stock to cope with the financial side - which is benefiting from Brexit - and a dramatic increase in IT and fund administration. Vacancy rates are at 6.5% which is a good position for both sides. We're delivering enough space to accommodate growth which is witnessed in the rate of rental increase which has tailed off considerably," he explained.
Pat Gunne said although Brexit was unequivocally bad for Ireland, the real estate industry was in something of a sweet spot. But he said the rapidly growing economy was also contributing. "It's difficult to differentiate between natural growth and corporates deciding to put capital to work elsewhere as a result of Brexit," he stated.
MORNING BRIEFS - Ireland's sovereign rating has been upgraded from A3 to A2 by Moody's. The ratings agency attributed the decision to continued strong growth of the Irish economy and a near balanced budget.
It also upgraded the outlook to stable.
*** This week is another big week in the world of central banking with the focus shifting to the US Federal Reserve. Investors will be looking out for an announcement by the Fed that it is going to start shrinking its massive balance sheet or hints towards another interest rate hike. That could help support the dollar.
*** Dalata Hotel Group has acquired 33 suites in the Clarion Hotel Liffey Valley. Earlier this month Dalata completed the acquisition of the core hotel in Liffey Valley. It plans to rebrand the hotel under the Clayton brand later this year.
*** Shares in Ryanair are down around 3% in early trading in Dublin after the airline announced those plans to cancel hundreds of flights in the coming weeks. The share price had already fallen late last week after a ruling by the European Court of Justice that crew can bring proceedings before courts in the place where they perform their duties. Ryanair said that ruling would not impact its cost base.