Green REIT / Hibernia REIT (new Irish REITs)


#101

Thanks

Did n’t Bloxams get into trouble market making in Irish stocks? In fact was it Davys that had that trouble with Greencore when it floated all those years ago? Come to think of it are there a few ex-Bloxam people working at Davys.

Easy to come with a conspiracy theory here if one was that way inclined.


#102

We are not talking about some insider scheme to scalp private clients.

Every morning, somebody in the capital markets part of AIB with a 0% loan from the ECB, buys large volumes of Irish sovereign debt. Even they know from having visibility into the balance sheet of AIB that AIB is insolvent and that by implication Irish sovereign debt is not sustainable. They know that while it looks like the ECB guarantees this debt, it does not. They still do it.

On most Tuesdays, the New York FED goes into the market and via their scheduled POMO operations (google it) at either 10.30 or 11.00, they sent the S&P vertical. The S&P in 2013, excluding POMO days is almost flat for the year (also google it). These are extraordinary times with extraordinary levels of Government intervention in broken markets.

With Irish commercial yields at c. 5% (getting close to their fair values), we have a tiny listed REIT whose shareholders believe that it worth paying almost 50% more to hold those assets via the REIT (I don’t think they do the same with the larger - but constructed in a way to not be capable of such manipulation - IPUT vehicle ?)

Still, you could be right …


#103

Probably two things in parallel. If Davys bought in at NAV and are now selling to clients at 1.30, that a tidy profit.

It’s only noise compared to the biggest carry trade in history or the biggest experiment with the financial system.

IPUT is valued by tradtion approach I believe - i.e. mostly on the basis of what did the one down the road go for . I believe that IPU are in the market too these days


#104

Green REIT now almost perfectely at 50% over NAV (world first for a REIT ?).

Mission Share Support almost accomplised for year end NAMA / Bank valuations :angry:


#105

irishtimes.com/business/sect … -1.1635116

IPUT buys Dublin office property at 6.5% rent. Sounds like it is not over rented. Anyone know how competitive this off-market sale was?


#106

I posted on Grand Canal Square - 50 sq ft rent vs 32 current market rent
thepropertypin.com/viewtopic.php?f=10&t=61551

Riverside was only slightly less over rented.

If rents don’t rise, these will give yields well below 6%

If bought via a REIT (and pay their premium to NAV) and it is even worse


#107

Maybe I’m missing something here but why is someone not shorting the crap out of this stuff. Is it too tightly held? Surely there’ll come a tipping point where holders will get out. Anyone know the lockup period if any which applies, I have not read the prospectus


#108

I wouldnt short this share - hazardous to your pocket.

Definately until the EBA stress tests are done, this will stay at a big premium to NAV.

You are not fighting a fair fight here - come back later when its mission is over.


#109

Credit Suisse are the book runners on this one. Works nicely for your conspiracy theory. Are nt these the same guys that were advising the government before the blanket guarantee was introduced.


#110

A possible source of the ramping in the REIT shares no doubt.

There are better candidates however in local stockbrokers.

At least one of them was given access to Draghi’s 0% money in 2012.
(this is the Draghi Doom Loop trade given to Irish Banks to pump them with carry)
thepropertypin.com/viewtopic.php?f=4&t=61578

They - alongside Irish banks - did the bulk of the buying of Irish debt to get yields to 3% (despite ‘junk rating’)

They pocketed the spread and capital gain (although still hold the capital risk on their b/s)

Surely the state - who needs the biggest premium to NAV - deserves a favour back?

(and if they don’t get it they can call in their loan and withdraw Draghi’s money :angry:)


#111

Green REIT has been falling for a bit now - looks like the smart money could be getting out of it.

Alternatively it could be the other money switching in hibernia one as it looks relatively better value. :angry:


#112

I’m waiting for DogeREIT before I part with my hard-earned.


#113

Green REITs 2013 mission was accomplished - the year end premium to NAV will now be incorporated into the ECB stress tests

It will be allowed to fall for a period - but not too much so as not to invalidate the year end benchmark (another BTFD situation ?!)


#114

Got a forwarded on an e-mail from a friend whose broker was pushing the Green / Hibernia REITs.
Obviously the hugh premium to NAV is a big stumbling block (I wont re-print the e-mail and the rationale given).

However, my reply was (numbers deliberately rounded / simplified for clarity):

Green are trying to buy good office at 5.75% at rack of 32 sq ft or c. 550 sq ft. The market however is now at just sub 5.5% (latest Blackstone purchase of the Platinum Portfolio or IPUT on 1 GCS) at rack of 32 sq ft or almost c. 600 sq ft

Above 1.40 per share, you are buying the Green REIT at a +50% premium (remember you have to allow for the set-up costs and broker commissions in the Green REIT which would be between 5-10% depending.

If Green do manage to win a good building, then it will have to pay c. 5.25%.
As an investor coming on at 1.40, you will therefore be paying 3.5%.
You also have to pay green 1% of NAV (in addition to other valid fees which you would incur anyway so ignore these).
Your net yield is therefore 2.5% at rack rents of 32 sq ft.
If Irish prime office rents doubled to London office rents at 60 sq ft, you will have bought at just below 5%.
You can buy any number of UK REITs today at discounts to NAV that have prime real estate at better yields and rents.
(they charge much lower fees than Green)

(I did the same example for Retail but it produces the same result)

Oh, and the UK is a semi-solvent economy that prints its own currency.


#115

British Land have a dividend yield of about 4.3%


#116

I’m not sure if you’re being ironic or not, but obviously dividend yields are not the same as rental yields.


#117

Not at all, their rental yield has to be higher than 4.3%.

I don’t own BL at the moment but have in the past.


#118

Sure. I thought you were disagreeing with something observer35 said.


#119

Actually the opposite!

It’s not a bad yield given bank deposit rates. Big currency risk and price risk even though I would be surprised if you didn’t get an exit with some capital gains if you were patient.


#120

+1 jake76

I do think that some of the UK REITs are ok value (and trade a discounts / close to NAV).

The UK government is not relying on their REITs to pump up property valuations for the ECB.