Dublin listed property investment fund Hibernia REIT has reported pre-tax profits of €70.6m for the six months to the end of September. REITs are funds that invest in property and give stock market traders the exposure to the property market if they wish. Hibernia invests mainly in office space, which would have been impacted by the recent trebling of stamp duty on commercial transactions from 2% to 6% announced in the budget.
Kevin Nowlan, CEO of Hibernia REIT, said the company had adjusted its valuations and profit to account for the change. "The impact is about 4%. We had a very strong six months with total property growth of 7%, which is about 2.5% ahead of the market average. Profit came in at around €70m and the impact of stamp duty post the end of the period is about €50m or so.
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Mr Nowlan explained that the stamp duty increase would impact on the property valuation. "Purchasers' costs are deducted from gross value. The stamp duty element was 2% up to October, it's now 6%. That was a roughly minus 4% adjustment impact. It's a once off adjustment and a valuation issue."
Kevin Nowlan said he did not believe the change would put investors off the Irish market. "Stamp duty was low to attract capital into the market. Moving to 6% is more in lines with international norms. It wasn't unexpected and I don't think it will impact on inward money. It's a deduction off value so it just has an impact on the end value," he explained.
He said the Brexit potential that the company had spoken of at its full year results time had started to manifest in deals. "You've seen deals from JP Morgan, Barclays, Bank of America, Merrill Lynch. We've seen it on our own portfolio. Legal firm Pinsent mason just took a floor from us at 1 Windmill Lane. "You're going to see Brexit being more of a drip as the UK works through the issues and if it's a negative outcome you might see more movement," he concluded.
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The Irish Music Rights Organisation and Deloitte have just completed a report on the value of the music industry to the Irish economy. The study reveals that the industry is worth just over €700m, while employment in the sector stands at over 13,000.
According to IMRO's chief executive Victor Finn said the industry is under threat as platforms are allowing access to creative work for inadequate return. To this end it is calling for a National Music Strategy to encourage further growth in the sector. He said that ensuring creators receive compensation for all uploads of their work is crucial to establishing a sustainable basis for the music industry going forward.
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MORNING BRIEFS - Belgian lender KBC Bank has set aside €54m in its third fiscal quarter to deal with the tracker mortgage issue. The figure is contained in the parent group's results published this morning. The issue has affected around 1,660 of its customers. KBC Bank Ireland today reported a net profit of €2.6m for the third quarter of the year, after tax and impairment charges.
*** Russia has given Venezuela a debt deal. Caracas will pay Moscow $3.15 billion over 10 years. The country caused alarm this week by defaulting on a number of payments. The oil-rich nation is $60 billion in debt.
