Green REIT / Hibernia REIT (new Irish REITs)


Don’t know if people are interested in property REITs but another property REIT has been announced today

This one has an unusual mix of characters.

Chairman is Danny Kitchen, the person who oversaw the disastrous exit of Michael Fingelton from Irish Nationwide with full bonuses and large pension and who publically defended Fingleton (arguably the worst banker Ireland had - which is saying something) because Kitchen did not understand how deep a hole Irish Nationwide was in (i.e. failed the 101 property test).

Manager is Kevin Nowlan, also a person with no actual experience in buying / investing in real estate (which is the prime job of a REIT). He used to work as a junior lender / wealth manager in Anglo Irish (not great credentials), an asset manager for Treasury Holdings (definitely not great credentials and very little ‘asset management’ likely being done) and finally a NAMA manager (who are more asset administrators then anything else). His NAMA stint is being pitched as ‘he knows where the deals are’ but as many international funds who have hooked up with ex-NAMA employees has found, they don’t know where the deals are (very few of them are actual property investors / fund mangers), and whatever NAMA does sell will be in the open market with full disclosure (to their credit).

It is very surprising that such a team would attract ‘international’ anchor investors UNLESS the Irish government (as I think it did with Green) is acting as an anchor investor indirectly through one of its many internal funds. Probably better to have REITs that will buy anything and everything as the system has a lot of stuff to sell. It is in all our interests that these vehicles bid on everything. In addition the Green REIT - with a tiny daily traded daily volume - is a ‘tool’ for the Irish Gov. as they look for benchmarks to value the +100bn of commercial real estate they are directly / indirectly exposed to (NAMA, Banks etc.)

Interestingly the Green REIT trades at about a 30% premium to net asset value. With commercial yields in Ireland now getting close to 5%, investors in the Green REIT are buying on a yield of about 3.5%. The best Green will be able to do is buy poorer assets at yields of about 7% which effectively net back to prime yields of 5% to investors in the REIT.

The Green REIT, like the Hibernia REIT, is also managed day to day by people who have been associated with real estate (agents, brokers, advisors) but never actually bought / invested as managers. However they do have one clear advantage over Hibernia REIT which is their retired Chairman (Stephen Vernon) was a major property investor in the 1990s. Despite his vast wealth, Vernon has only put 10m (max) into the 300m Green REIT and has not bought a single piece of Irish real estate (to my knowledge) to date.

I am surprised that no actual Irish ‘property investment’ manager (i.e. someone with experience of actually buying and selling assets to earn an investment return) has set up an Irish REIT so date ? There are some good ones out there with decent records who were active sellers into the boom to developers. They were touted as being ‘dumb funds’ exiting by the Irish media who cheer led every single bank backed developer deal as visionary (remember the ‘Baron of Ballsbridge’) - they don’t look so dumb now.

Perhaps they would not be so keen to buy the stuff that Green and Hibernia are being set up (I mean self-directed) to invest in (Stephen Vernon is with them on that score). I have since noticed that Frank Kenny (the only Hibernia Board member with actual real estate buying experience, has also not bought in Ireland but seems to have provided the 3m that ‘management’ are putting into the Hibernia REIT (little chance the Nowlans have any money as they never made any in the real estate boom / collapse).


Are you sure if your figures?

Commercial Real Estate yields are a lot higher than 5%.


Prime retail in Dublin is trading at about 4.5-5.5% when applied to the current ‘rack’ rents
Most retail rents are about 2x ‘rack’ and the yield you see quoted is higher as they are on these rents
When you break down the price you get 4.5-5.5% on rack plus the over-rent at c. 6% (depending on outstanding term)

Prime office in Dublin is trading at about 5.5-6.0% when applied to the current ‘rack’ rent
Unfortunately most office rents are at 1.5x ‘rack’ and the yield you see quoted are on these rents (also covenant issues)

Even ‘distressed’ is trading at about 7% max at ‘rack’ rents however there is billions of same in Germany, UK etc.
No reason to do it in a smaller less liquid market like Ireland which has a much more serious total debt position.
This is why most the ‘distressed’ real estate funds have left Ireland (or come to the end of serious buying).
NAMA has also disclosed that it will not sell property at a discount rate of over 4.5% (with conditions re exeptions)

The main bidders active the Irish market are usually other types of foreign REITs like Kennedy Wilson or Hines.
These funds target long-term unlevered yields of c. 7-8% and their share prices are very close to their NAV (rational).

The problem for Green REIT investors is that they are starting at a 30% disadvantage.
In Hibernia’s case (assuming shares are similarly priced) it will be with a team that has never bought assets?
(At least Green comes with Stephen Vernon who was a major Irish property investor in his day)?




I read the factsheet and bios. I’ll pass on this golden opportunity.


Why do you urge him?


Obviously because it’s touting prospective long term returns of 10~15% per annum :wink:

Knock yourselves out: … -Factsheet


successfully purchased. Amazing.

Reminds me of all those Sindo headlines “Irish tycoon triumphs in purchase of trophy property in London”


I back the jockey not just the horse.

In real estate investing terms:

The son is equivalent to a stable boy, whose stable went bust and then worked with the receiver to mange the other jockeys out. He has never to my knowledge ridden a horse (at least not in competition).

The father is equivalent to the local vet, knows a lot about the health of horses and can talk at length about them. He used to do some riding in his earlier days but didn’t make it and turned to being a vet instead.

I read the management are putting in 3.5m. I would be surprised if the Nowlans have made anything like this kind of money in real estate and I suspect reading the fine print that Frank Kenny is also classed as ‘management’ (he may get his ‘large’ 3.5m stake back in fees so he won’t be fully exposed to the Nolans experiment in Irish property investing).

Don’t know much about Frank Kenny in fairness but have never seen much of him over here in Irish real estate. The rest of the Board is filled with ‘property heavyweights’ like Terrence O’Rourke of KPMG (noble auditors to Irish banks in the boom), Colm Barrington of Aer Lingus (sure property is just like aviation) and of course Danny Kitchen (who ensured that Michael Fingleton managed to exit Irish Nationwide with full military honours before anybody realised how bad it was - Danny included).

I’m with ‘grumpy’ on this - not for me.

At least Stephen Vernon of Green REIT is an actual hardened Irish real estate investor who made serious amounts of money and protected himself in the collapse (not sure about the rest of the team), however the 30% premium to NAV means not for me also.

REITs are good development for the Irish market as its a fast way to get dumb foreign money into the market in volume (vs. our own dumb money which is all gone or under the mattress) and get these assets off the balance sheets of Irish banks. It insulates us from the aggressive smart foreign real estate funds like Blackstone, Apollo and Loanstar, who are now leaving Ireland (prices are just getting too high for the sovereign risk undertaken).

I have seen Hines (a foreign quasi-REIT) trying to sell down its Irish deals to international investors via foreign HNW banks (Anglo one more time) to give themselves liquidity at REIT-type yields (plus management fees). Again, as Wall Street has been practising for decades, burning foreign investors with domestic assets is the smarter move - every time they loose money, it is stimulus for the nation.

A downside of REITs however is that if the FED stops printing money (and Draghi doesn’t replace with LTRO), then collapsed Irish REITs will set valuation metrics that will cause problems. The Trokia (who still have over 100bn in Ireland at almost 0%) won’t need to rely on Irish EAs / Auditors for metrics as it will be printed on the screen? I’m sure however the NAMA will stick to its own 4.5% metric.


In fairness I don’t know much about the promoters of this REIT but based on a tring of other opportunities I’ve come across I don’t need to know anymore.

I’d imagine the most certainty for this proposition surrounds the compensation of the promoters.

I have urges but none of them relate to finding out anymore about the Hibernian REIT.
I dont fancy buying at a premium to nav either so the green REIT would be out for me too.


Come to think of it, it is unusual that NAMA doesn’t launch its own REIT
(especially when ex. NAMA admin officers can do it with no prior investment experience)
However, that would require NAMA to mark more of its book to market
(probably not a pretty prospect)
Better to sit on the 40bn of 0% ECB money and take the spread
(will pay for the fields in New Ross that NAMA valued at 3m an acre, down from 7m an acre at peak, as a sensible discount !)


Reading the Goodbody thing today really reminded me of the halycon days of the tiger. A huge opportunity bereft of facts aside from the opportunity to get 10-15% pa in a REIT with a sturdy mgt team. For me, this is just a bunch of guys oogling Stephen Vernon’s success at getting huge demand for his reit and cobbling together a plan quickly. Good luck to them. If foreign money wants to invest in a REIT with no assets or management team with a track record of assembling or managing a REIT, fair play. First of all, congratulations to them for targeting returns of 10-15% per annum. Quite an achievement that would be in a REIT, innovative dynamics if you wish.

Danny Kitchen - Stephen Vernon’s finance director so understands the transactions. Never heard him praised. Don’t mean that in a bad way. I am sure he’s very accomplished. Vernon has an impeccable record. His FD’s ability in this kind of play - unproven.

Terence O’Rourke - managing partner to KPMG in 2007. KPMG audited Irish Nationwide under his tenure, a fucking cesspit which remarkably, well after the start of the crisis reported record earnings with a clean audit report. Despite the worst loss as a percentage of asset value, not only have KPMG avoided any proceedings, they are winding up the fucking thing. So, despite not knowing Terence, his role in KPMG, and their inability to recognise the potential reputational damage of being associated with INBS given what they knew, suggests to me that I wouldn’t put a packet up peanuts under his governance, never mind money.

Colm Barrington - great guy. Never heard him do anything in property apart from an ill-fitting sun room at the rear of Sorrento Terrace.

Stewart Harrington - honestly no idea.

Bill Nowlan - the suggested sage. Does he know value? Fuck that. Unless 2 years is “just around the corner”.

If you are international, Goodbody’s, the venerable Irish stockbroker previously owned by the 98% Irish government owned AIB plc, now by FEXCO, have a long and established track record of destroying investor value in the tiger years with this type of shyte.

*Grumpy is not licensed to give investment advice and is not providing any above. The value of your investment can soar to the sky as well as be shitted down the crapper. Just noticed the google ranking on this page and thought I’d give a little context to the proposition based on my honestly held views. In fact, whatever way you interpret the above as meaning, probably do the opposite based on my record.







Seriously though you are having a laugh? next you’re gonna say its a no brainer


Gotta ‘here here’ that.
Education system at least ten years away from being anywhere near one of the’best in the world’…*

*might be having one of my overly optimistic days



Ok, this deserves a better answer than one after wine.

This is a negative board and I am not negative. A good part of that is that we have cut costs in the past few years. A good lot of this is in occupancy costs. If we reverse that, we jeopardise investment. We have a REIT proffering 10/15% gains. Sorry, not sustainable. CT - for sure enshrined but as Craig Barrett said years ago at this stage, the benefits of investing in Irelad have to amount to more than tax. A shortage of space? Bullshit proffered by estate agents. Masses of HQ rental space here well located.They refer to a shortage of 100k sq ft props that very few companies require. Those guys you refer to have been here and bought previously. Are they buying now? The bargains are gone. (IMHO - the funding of external money is way cheaper than Irish money. You want to own these things forever?).

REIT wrong platform? IMHO this one certainly. Speculative and unproven. Direct investment offers a far superior return, even at this compressed yield stage. You figure the gradual unwinding of the Green 30% surplus to NAV to 90% over 5 years and see the required returns to justify the investment, you’re out. If you can use a calculator.


Oh what the hell, LuckyMe1’s elevator pitch needs a response


Prospective investors who have read LuckyMe1’s prospectus on the Irish ‘no brainer’ REIT opportunity should be aware of the following (which no doubt LuckyMe1 will include in the tiny print of the final prospectus which you will get after the float and never read):

  1. Irish Debt Sovereign Debt = Greece

The effect of accounting transactions by US multi-nationals shielding EU revenues from EU, US and (ironically) Irish tax authorities inflates Ireland’s GDP by c. 20%. Adjusted, Ireland’s Debt to GDP is c. 155% (vs. Greece 156.9) and Deficit is c. 9% (vs. Greece 9%)
(discussed at more length here

  1. Irish Personal Debt = Worlds Highest

Unfortunately, unlike Greece, Ireland’s personal indebtedness is the highest in the OECD (you can google it yourself). In the early 1990s Ireland reduced Gov. Debt from 100% of GDP to 30%. This was at a time when personal indebtedness was tiny and Irish banks were vastly underleveraged (to 2nd world status). Do not rely on this happening again.

  1. Ireland Survives on Draghi

The ECB has +100bn of debt in the Irish system (banks+sovereign+NAMA+central bank+others) which is shorter dated and charged at 0%. Trichet believed Ireland should pay 3% on this money and should downsize its economy until it could afford it. Draghi removed this charge in 2012 to give Ireland more support. Since then, Irish government has stopped / slowed most austerity.

This has created unusual situations. In housing for example, Ireland has zero foreclosures as its banks do not have the balance sheet (55% of mortgages are from 2006-08). Most of mortgages are ‘trackers’ linked to the ECB rate. Thus most Irish in negative equity are paying almost nothing on their mortgage, and the ECB is providing their bank with 0% financing to back this.

Changes in this approach, or any rise in ECB rates, will trip Ireland into a recession or worse.

  1. Irish Commercial Yields = US / UK + 100bp

Irish commercial property is trading at US and UK yields plus 1%. Most Dublin good commercial (i.e. with some liquidity) is trading at 5-6% on current rents (7-8% on over rents). Prime retail is trading at sub 5%. NAMA (who controls most real estate directly or indirectly), has an official discount rate of 4.5% on its assets. You should also be aware that Irish commercial leases have now been changed to the German-style with up and down reviews every five years (i.e. more like an equity than a bond). It will take time for the Irish market to adjust to this however we are starting to see the smarter international real estate funds leave Ireland in favour of Germany where the yields are similar (or higher) than Ireland but items 1. to 3. above are not in place.

  1. Decoding Irish Commercial Rents

Because of the significant tightening of Irish commercial yields, Irish agents changed their presentations to why Irish rents will double in the next 5 years. Irish retail rents, which are hardwired to Irelands economy (without the Google GDP lift) are still falling today - even on the best streets. Outside of Finland, Ireland has the highest retail density per cap in the EU).

Irish office rents were never at 60 sq ft - agents / banks did this to increase the value of collateral in Ireland. True Irish office rents were closer to mid / late 40’s. The Irish IDA is insisting that US multi-nationals in Ireland to avoid EU / US and Irish (ironic) tax, pay artificially higher rents (these firms need to have 1 Irish 70k job for every 5-10m of revenues shielded to satisfy transfer pricing rules and are therefore heavy users of Dublin office). This may give the sector a lift, however, there is a lot of office space in Dublin that can be renovated quickly and if you can’t find a US multi-national to take it (which will all be on new up and down leases anyway), you are in trouble. Google has been unusual in that it HQ’ed itself in the centre. All the others (Microsoft, HP etc.) are on the outskirts. Given that the jobs these multi-nationals use are lower / average grade (software localisation etc.) there is no need to be in prime locations.

  1. High Competition for Small Assets

‘Smart’ real estate investors looking for good double digit returns (Blackstone, Apollo, Loanstar etc.) have stopped bidding for normal Irish assets (still trying to do large deals with Government but not getting their calls returned due to Draghi’s 0% money). Note recent pulling of Board Gais sale to Blackstone despite fact the world (and Irish) stock market valuations are really high.

There are a lot of International REITS / quasi-REITS who have a much lower return expectations. These REITs have been in Ireland for years and have full buying teams and have still not managed to buy a material amount of property given the quantum that - in theory - is for sale. They are also in competition with a surprisingly large amount of local buyers (i.e. Larry Goodman etc.) - for every cheque a bank lost, there was an Irishman on the other side. As rich locals, they are well connected and still manage off-market deals.

These reason why so little asset has traded is because the Irish Government, backed by the ECB 0% money, who directly or indirectly controls most real estate, is reluctant to sell anything over a discount rate of 4.5% (full prime UK / US yield) given the carry they get.

The papers recently reported that the Green REIT has paid premiums of about 20% (despite being at a 30% premium to NAV) to secure even 100m of assets (ARC portfolio), which were heavily bid on by International and local buyers (names were disclosed by mistake).

  1. Premium to NAV

Buyers of Irish REITs at premium to NAV should be aware that despite the limited free float in these REITS (anchor investors are locked in), there is ABSOLUTELY no evidence whatsoever of any kind of Irish government sponsored share support scheme to keep these 100m cap REITs at 30% premiums to NAV so that they can justify valuations of +100bn of assets to Draghi etc. The premium to NAV is purely reflective of the wider market sense that Irish commercial yields are too high and should be at c. 3-3.5% given the amazing rental growth opportunities ahead, in a heavily indebted county, on life support from Draghi, with up and down leases.

  1. Effect of the Departure of the Trokia

It was under the Trokia that foreign regulators such as Matthew Elderfield were appointed (not by us) who investigated the long insolvent and unregulated multi-billion Quinn Group (no Irish regulator would ever / or will ever do this), and who forced the Irish banks to produce data on arrears etc. While Draghi will control Ireland from afar, the ‘exit’ of the bailout programme has seen a clean-out of all foreign officials in Ireland (central bank etc.). From now on, Ireland’s national accounts plus its bank accounts will go back to using the tools Italy and Spain employ to make things look better (including the return of the phantom 25-30bn that Irish banks used to pass amongst each other for their staggered year end accounts with the support of the Irish Gov.). We call this putting on the ‘green jersey’. It could be a good thing in the short term, but as with too early investors into Greece at start 2010 (when its Debt to GDP looked much better), if things turn down again and Ireland comes back under the microscope, it could be tricky.

NOTE: While the above risk items may concern you, the Hibernia REIT has assembled a ‘world class’ team of hardened Irish property investors who made and protected their money in the collapse and know how to beat the locals, REITs, many others active in Irish property. Terrence O’Rourke and Danny Kitchen’s involvement and support of deeply insolvent Irish banks and their CEOs was out of their control (wasn’t the property crash global), the Nowlans have nothing to do with the Nowlan sisters and have worked and lived in Irish properties all their lives, the fact that Frank Kenny seems to have bought little / no Irish real estate in the collapse (personally or for his fund) is irrelevant and the fact that the 3m he is stumping up as ‘management’ gets largely re-funded in share of fees etc. in no reflection of his future views on Irish real estate or the Nowlan’s skill level. Goodbody’s involvement and promotion of Irish real estate funds to Irish investors right up to and past the crash is no reflection on their potential performance going forward. In any event, Colm Barrington may not be involved in property but as Chairman of Aer Lingus, he will fire Goodbody as their stockbroker if this goes bad (as least you get that satisfaction.)