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Green REIT wins Cosgrave’s Dublin portfolio for €375m

Green REIT, Ireland’s maiden real estate investment trust, signed contracts last night to acquire a pool of Cosgrave Property Group office and retail assets in Dublin for €375m, in an off-market process codenamed Project Sapphire.

Cosgrave Property Group has sold a 650,000 sq ft component of its wider property portfolio, comprised of office buildings at Georges Quay and George’s Court, Dublin 2 and retail and other commercial space in Westend Retail Park, Blanchardstown, Dublin 15.

The Project Sapphire process ran concurrent to the RBS Project Button loan portfolio sales process, which included a tranche of Cosgrave Property Group debt which traded to Davidson Kempner, the hedge fund.

CoStar News understands that Cosgrave Property Group invited a select group of investors to bid for the Project Sapphire pool of its property empire, comprised of Green REIT, Hibernia REIT, IPUT, Irish Life and Kennedy Wilson Europe.

Green REIT emerged as the preferred bidder and exchanged conditional contracts with the Cosgrave Property Group last night, with the Irish REIT confirming the portfolio was closed on an all-cash basis for €384.4m, inclusive of estimated acquisition costs.

The proceeds from the acquisition of Project Sapphire by Green REIT will repay the legacy secured debt, which partially includes the debt Davidson Kempner acquired from RBS through the Project Button loan tranche.

Project Button included four additional tranches: Monohan, Cleveland Investments, Corbo and James Stanley. CoStar News understands that the individual winners of these tranches were Apollo, Goldman Sachs Special Situations Fund, Marathon and Brevan Howard, however, it is still unclear which tranche was acquired by which fund.

In a statement on the Stock Exchange, Green REIT confirmed this Dublin portfolio acquisition would now spark a financing mandate. Based on previous leverage levels, this could see Green REIT seek up to 65% of the portfolio’s value in senior debt, which would imply a financing mandate of around €243.75m.

“The directors are confident that bank debt can be raised against these high quality properties with a strong tenant line-up in strong locations,” Green REIT said in a statement on the Stock Exchange.

A spokesperson for the Cosgrave Property Group confirmed that “the disposal represents the culmination of a strategy to deleverage the business and to concentrate on its extensive development portfolio”.

The Project Sapphire property portfolio delivers a passing rent of €23.7m per annum on expiry of rent free periods, from 58 tenants and with a weighted average unexpired lease term of 4.8 years.

The purchase price reflects a net initial yield of 6%, with the portfolio’s occupancy at 97%.

The main office tenants include Pioneer Investments, Invesco, Northern Trust, GAM Fund Management and RBC Dexia. The main retail tenants include Next, Nike, Gap, Heatons, New Look, Lidl and Argos.

Stephen Vernon, chairman of Green Property REIT Ventures, said in the statement to the Stock Market: “The acquisition of this substantial portfolio of high quality properties represents significant progress towards our stated objective to assemble a portfolio of commercial property assets which delivers targeted shareholder returns. Our total invested capital will exceed €719m when this acquisition completes.

Pat Gunne, chief executive, Green Property REIT Ventures added in the statement: “We are delighted to execute a transaction of this scale and quality at this point in the Irish real estate recovery cycle.

“It also demonstrates the strength of our team and enhances our reputation as low risk counterparties within the Irish property industry. We look forward to actively managing this substantial portfolio of exceptional assets and to continuing the excellent relationships developed with the tenants by the Cosgrave team.”

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