Green REIT is returning to the capital raising markets to raise a further €385m of net equity capital as Ireland’s first ever real estate investment trust seeks to capitalise on the continuing flood of real estate coming to the market amid the country’s most frenetic transactional period for seven years.
In a statement this afternoon, Green REIT outlined its placing offer – just nine months after its maiden capital raising – to raise €400m through the issuance of 356.9m ordinary shares at €1.12, which reflects a 5.5% discount to end of Thursday’s (April 3) closing share price.
Green REIT states that the market was at “a stage in the cycle where there was a positive gap between investment yields and borrowing costs enabling attractive risk-adjusted returns to be generated in an environment of relatively modest gearing”.
Back on 31 January, Green REIT, alongside its joint venture partner and shareholder PIMCO, won the fiercely-competitive blind auction to win Central Park for €311.5m south of Dublin city centre, ahead of Blackstone and Lone Star.
Bank of Ireland financed the Central Park deal with a five-year €150m senior loan priced at 295 bps over three-month LIBOR, CoStar News understands, underlining the REITs ability to command competitively priced acquisition finance.
In a prepared statement this afternoon, Gary Kennedy, chairman of Green REIT, said about the €400m capital raising: “Green REIT raised gross proceeds of €310m in July 2013 and established itself as the first real estate investment trust in Ireland.
“The success of our listing and capital raise was based on a combination of our proven and experienced management team and our attractive timing. We established ourselves as an investor in the Irish commercial property market when market activity was increasing and values started recovering.
“We have now successfully deployed €335m of equity and debt over a nine month period – consistent with our stated strategy. Our objective now is to raise additional capital to grow the size of our portfolio, enhance our income stream and drive shareholder returns.”
Stephen Vernon, Chairman, Green Property REIT Ventures Limited, the investment manager, said: “We have made rapid progress since we established Green REIT. The progress made reflects our ability to identify and acquire attractive assets – both on and off market – due to the strength of our team, our disciplined approach to asset acquisitions and our extensive network of industry relationships.
“We now intend to raise additional capital and believe we are well positioned to capitalise on the opportunities presented by current and expected market conditions. Our objective is to continue to build a portfolio of high quality assets which will deliver an attractive return for our shareholders.
“The capital raise at €1.12 represents a 12.0% premium to the issue price per share as at IPO on 18 July implying an annualised return of 16.8%.”
The prospectus containing details of the capital raise and the circular containing details of the resolutions are expected to be published on Monday 7 April.
Davy and J.P. Morgan Cazenove are joint bookrunners.
Green REITs investment management team, led by Stephen Vernon and Pat Gunne, focuses on creating both sustainable income and strong capital returns for the Group with a target total pre-tax shareholder return of 10% to 15% per annum.
In October 2013, Green REIT acquired first investment property, the INM Building, and in November 2013, the Company acquired a portfolio of 10 investment properties (eight of which are located in Dublin) from Danske Bank Ireland for €127.6m, with an initial yield on the investment properties in excess of 8.5%.