Henderson Park Bets $1.5 Billion on Green REIT in Ireland

(Bloomberg) -- Private equity firm Henderson Park Capital Partners U.K. agreed to buy Ireland’s Green REIT Plc in a 1.34 billion euro ($1.5 billion) in a bet that investors were undervaluing the firm.

An affiliate of Henderson Park will pay 1.9135 euros per share in cash for Green, the U.K. firm said in a statement on Wednesday. The price is a 24.7% premium to the real estate firm’s share price before it began a process to sell itself in April.

Buying Green “offers a rare opportunity to invest in a large institutional quality office portfolio and a strategic logistics park through a single transaction,” Henderson Park Chief Executive Officer Nick Weber said. “We believe in the short-term and long-term prospects of the Irish market with its strong macroeconomic backdrop and underlying real estate fundamentals.”

The deal will immediately make Henderson Park one of the biggest office landlords in Dublin, amid what has been a booming economy buoyed by an influx of tech firms led by Google Inc. and Facebook Inc. Green shares had been trading at 1.53 euros before it kicked off a sale process, well below its net asset value per share of 1.83 euros at the end of December. That increased to 1.87 euros at the end of June.

Green REIT shares traded up 4.4% at 1.90 euros in Dublin at 10:30 a.m.

Demand Stalls

The deal, which is subject to regulatory approval, comes as the Irish commercial real estate market shows signs of slowing after years of growth. Prime office rents in Dublin more than doubled since Stephen Vernon and Pat Gunne set up Green in 2013 but are unchanged in the past year. Other investors including Starwood Property Trust Inc. are offloading assets while yields, a measure of profitability, hold near record lows.

Vernon earned a reputation for prescience when he sold much of his previous property holdings before the 2008 crash. As early as 2015, he said the “golden period’’ of returns was probably over. The Irish economy meanwhile is seen as particularly vulnerable to a so-called no-deal Brexit.

Still, demand for office space in Dublin is at an all time high, according to CBRE Group Inc. The deal is “a welcome vote of confidence in Irish commercial real estate,” Colm Lauder, an analyst at Goodbody Stockbrokers in Dublin, said in a research note.

JP Morgan Cazenove Ltd. is lead financial adviser and corporate broker to Green REIT, while Dublin-based securities firm Davy is joint financial adviser and corporate broker. Eastdil Secured LLC and Wells Fargo Securities LLC are financial advisers to Henderson Park.

©2019 Bloomberg L.P.

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