Green: the colour of money?
Editor’s comment: Pat Gunne and Stephen Vernon aren’t stupid, are they? Their decision this week to put Green REIT, Ireland’s first real estate investment trust, up for sale could quite easily be hailed as the top of the market.
Maybe it is, but it is also pretty likely that the Dublin market in particular still has plenty of growth left in it.
More likely is that here are two real estate veterans, two guys who have been in markets like this more than once, more than twice, probably more than three times before, who have had enough of the listed game (although they have ruled themselves out of any take private of the €1.5bn firm).
Editor’s comment: Pat Gunne and Stephen Vernon aren’t stupid, are they? Their decision this week to put Green REIT, Ireland’s first real estate investment trust, up for sale could quite easily be hailed as the top of the market.
Maybe it is, but it is also pretty likely that the Dublin market in particular still has plenty of growth left in it.
More likely is that here are two real estate veterans, two guys who have been in markets like this more than once, more than twice, probably more than three times before, who have had enough of the listed game (although they have ruled themselves out of any take private of the €1.5bn firm).
Or maybe they do see the inevitable market crash coming sooner than the rest of us.
Vernon built up Green Property from a €24m company in 1993 to the beast it is today. He led the €1.8bn buyout of the company in 2002, when it was trading at a 40% discount to NAV – a figure that makes today’s 16% discount look alright. He then teamed up with Gunne – who had already built up and sold Gunne Commercial to CBRE – to invest heavily in the undervalued Irish real estate market and attract a tonne of foreign money into it.
And it is foreign money that is most likely to swoop on Green REIT. Its listed Irish rivals, particularly Hibernia, are clearly keen to pick up the portfolio, but whether they will be able to compete with the likes of Brookfield, Blackstone, or perhaps even shareholder Norges Bank Investment Management, which has made clear its commitment to real estate investment, is debatable.
Gunne and Vernon are widely recognised for their call-making prowess. They steered clear of residential and leisure, quit retail and focused heavily on offices in a region that is hugely attractive to the new global power players – the tech firms – and, if Brexit does happen, will be increasingly attractive to financial institutions too.
Top of the market or not, what will be interesting is what we learn from pricing during this exercise. Where will bids come in? How will that reflect current pricing on Dublin offices (4%)? How will that compare with other UK-listed REITs that have been in play over the past 18 months? Moreover, it will show us who is in the market at a time when deal volumes are depressingly low.
■ And so to Jeff Bezos, the slightly less richest man in the world, and his annual letter to shareholders which, as always, has something for all of us in business to take away. This year there is a paragraph that could have been written purely for our community. I’ll leave it here with you with the one ask that we as an industry at least try to take it on board.
“From very early on in Amazon’s life, we knew we wanted to create a culture of builders – people who are curious, explorers. They live to invent. Even when they’re experts, they’re ‘fresh’ with a beginner’s mind. They see the way we do things as just the way we do things now. A builder’s mentality helps us approach big, hard-to-solve opportunities with a humble conviction that success can come through iteration: invent, launch, reinvent, relaunch, start over, rinse, repeat, again and again. They know the path is anything but straight.”
To send feedback, e-mail samantha.mcclary@egi.co.uk or tweet @samanthamcclary or @estatesgazette
