Irish specialist Green REIT is planning a shift in its portfolio to up to 25% logistics, in anticipation of imminent expansion in the sector arising from Brexit and the growth of online retailing.
Pat Gunne, Green’s CEO, said Brexit meant that both Ireland’s pharmaceutical companies and the retail sector were reviewing their export and supply chains.
‘Ten out of the top 11 pharma companies in the world are represented in Ireland on the manufacturing side, and they have been using the UK as a medium-term storage hub,’ said Gunne.
Ireland’s retail supply chain, bar perishable goods, runs through the UK, he added. ‘That supply chain has to be reconfigured, with the supply chain issues arising from Brexit.’
He continued: ‘Internet penetration in Ireland is very low and yet the growth rate is very high. So it is inevitable that the case for logistics will arrive.’
The REIT has been adding to holdings of land around Dublin airport at Horizons Logistics Park where it now controls 300 acres (121 ha) with the potential for 2.6 million sq ft (241,500 m2) of space.
‘The most important thing about logistics is having the land. Ours is between the M50 motorway and the airport and it has 25 minutes’ direct access to Dublin port,’ Gunne said.
This year, Green completed three further units at Horizon Logistics Park, including a 7,640 m2 (82,000 sq ft) facility for Kuehne + Nagel let at just over £10/sq ft.
Horizon Logistics Park is key to a development programme that will create stock with an end value projected at €600 mln. Development will be funded by recycling capital from its exit from retail – in June the REIT sold Blanchardstown’s Westend Retail Park for €147.7 mln at a 55% profit to DWS – and debt. A new revolving credit facility with Barclays and Wells Fargo has been put in place.
Green was the first REIT to be established in Ireland, in 2013, and it is committed to increasing its dividend to investors. The dividend announced with the results this week is 3%, which Gunne pointed out has been 100% covered by income for the first time. Its target is 4%.
This article first appeared in EuroProperty, PropertyEU's weekly news and analysis bulletin.
